Eicher Motors zooms 4% to top Nifty 50 gainers as Jefferies raises target price

The Eicher Motors stock zoomed over 4 percent on September 26 and was the top gainer on NSE Nifty 50 in the morning hours after global brokerage firm Jefferies raised the target price and made it a preferred pick along with TVS Motors.

At 9.50am, the stock was trading at Rs 3,534, up 4.4 percent from the previous close on the NSE.

Jefferies analysts cited reasons such as alleviating competitive concerns, along with tailwinds of two-wheeler demand recovery, industry premiumisation and exports for Eicher Motors’ robust growth prospects.

With a ‘buy’ rating on the stock, Jefferies has raised Eicher Motors’ target price to Rs 4,150, implying an upside potential of 22.5 from the September 25 closing price. The previous target price was Rs 4,000.

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Royal Enfield on a smooth ride: The brokerage firm suggests that Royal Enfield (RE) appears well-placed to benefit from a potential demand recovery in Indian two-wheelers, given its differentiated products and strong franchise. “RE should also benefit from significant headroom for Indian 2W demand to move to premium bikes,” Jefferies said.

Valuation expansion on the cards: Given the strong tailwinds of two-wheeler demand recovery, industry premiumisation and potential to grow exports, Jefferies is valuing RE at 25 times PE (earlier 24 times) and commercial vehicle business at 5.5 times FY25 PB. “We see the potential for RE multiples to expand if it is able to largely protect its market share in the ongoing most formidable phase of the competition.”

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