Eicher Motors Ltd.- Momentum to sustain, Upgrade to BUY: Emkay

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Eicher Motors Ltd.

Momentum to sustain, Upgrade to BUY

BUY

CMP: Rs1,354                                        Target Price: Rs1,700

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n     Operating performance in line with sales at Rs 12.9bn (our est Rs 12.1 bn) while EBITDA at Rs 1.3bn (in line). Higher other inc & lower tax leads to APAT of Rs 763mn (~13% abv est.)

n     Targets ~15%/~30% mkt share in heavy duty/medium duty commercial vehicles in next 2-3 years. Engine business to start contributing from CY13

n     Raise our CY11/12 EPS by 13%/14% to factor in higher volumes (+7.5%/7.6%), better product mix and lower RM cost pressure

n     Remains a preferred play in the CV space. Raise our TP to Rs 1,700 (current business value – Rs 1,547, NPV of engine business – Rs 153). Key risk-sharp downturn in the industry