Macquarie downgrades Eicher Motors to neutral

Brokerage firm Macquarie Research has downgraded its rating on Eicher Motors to neutral and cut its target price to Rs 3258 a share, according to CNBC TV. Despite this downgrade, the stock was up 1.4 percent to Rs 3095 a share.

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Brokerage firm Macquarie Research has downgraded its rating on Eicher Motors to neutral and cut its target price to Rs 3,258 a share, according to CNBC TV. Despite this downgrade, the stock climbed 1.4 percent to Rs 3,095 a share.

As per the report from CNBC, the brokerage firm has reduced its projected earnings for FY24 and FY25 by 12 percent and 10 percent, respectively. This revision is attributed to the decrease in both volumes and margins.

According to a report from Macquarie, as quoted by CNBC TV, Eicher is currently trading at a price-to-earnings ratio of 24x based on FY25 projections. This represents a 16 percent discount from its 10-year average of 28x. The report states that this discount is reasonable given the slower growth outlook for earnings.

The brokerage firm anticipates a Compounded Annual Growth Rate (CAGR) of 13 percent for Eicher’s earnings during the financial years 2023-2025. This represents a significant slowdown compared to the growth rate of 35 percent observed during the financial years 2014-2019, according to a CNBC TV report.

In terms of recent sales performance, Eicher Motors reported a year-on-year increase of 35.2 percent in commercial vehicle sales for the month of March, with a total of 11,906 units sold. Similarly, Royal Enfield recorded sales of 72,235 motorcycles during the same period, indicating a rise from the 67,777 motorcycles sold in March of the previous year.