Eicher Motors Ltd. In line, Downgrade to ACCUMULATE ::Emkay

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Eicher Motors Ltd.

In line, Downgrade to ACCUMULATE

ACCUMULATE

CMP: Rs 1,709                                       Target Price: Rs 1,975

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n     Results in line with EBIDTA/PAT at Rs 1.5bn/737mn vs est. of Rs 1.4bn/720mn. While two wheeler business disappointed, CV business surprised positively

n     Demand for EIM’s product continues to remain strong. However, macro environment for M&HCV is deteriorating. The impact, if any to be visible after two quarters

n     Raise our CY11/12 EPS by 8%/16% to factor in higher volumes (+5%/4.8%) and lower RM cost. See downside risk to vol. est. due to macro environment/capacity constraints

n     Upgrade TP to Rs 1,975, (current business value – Rs 1,822, NPV of engine business – Rs 153). However, downgrade rating to ACCUMULATE