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On a boulevard to success !!!!!!
Eicher Motors Ltd (EML) is present in commercial vehicles, two wheelers and related component and design services. Volvo entered into a JV (VECV- Volvo Eicher Commercial Vehicles) with EML as joint promoter of the commercial vehicles business.
Increasing demand for Royal Enfield
EML rides high on success of its Royal Enfield business. The brand has now been highly recognised and leading to exceptional growth in demand (6-8 months waiting period). EML is increasing capacity for Royal Enfield from existing ~70,000 units to ~150,000 units in CY13.
Commercial Vehicles to benefit from JV
Combined efforts of Volvo's technological proficiency and high quality standards, together with EML's distribution and low cost manufacturing will lead the road to success in HCV space
Global Manufacturing Hub
Volvo Group plans to make VECV’s plant in Pithampur the base for its futuristic Medium Duty Engine global Platform involving an initial investment in industry of Rs 2880 mn. The 5 and 8-litre engines will be produced and assembled in India.
Slowdown in the CV industry
The overall CV industry is facing a slowdown in line with the overall automobile sector and raising concerns of lower economic growth. As Eicher follows calendar year the overall impact of this slowdown will not be visible in its CY11 numbers. However, going forward we believe that Eicher will also witness pressure in this segment in CY12. Despite this, the long term story remains intact. With recovery in demand in late CY12 and CY13 and enhanced capacity we believe that Eicher is poised for strong growth in the long term.
Valuation & Recommendation
Although, the final results of the steps taken by the company will be clearly visible from Q1CY13 onwards, we believe that the company has taken the right steps in the right direction and the initial success signs are visible.
Considering the robust earnings growth and strong balance sheet, we believe that EML will continue its growth story in the coming years.
At CMP, the stock is trading at P/E of 14.8x CY11E, 12.2x CY12E and 11.1x CY13E. Though the near term outlook for the stock is slightly subdued, we believe that the stock can be ‘accumulated on decline’ from a long term perspective. On consolidated basis cash per share comes to Rs 629.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
On a boulevard to success !!!!!!
Eicher Motors Ltd (EML) is present in commercial vehicles, two wheelers and related component and design services. Volvo entered into a JV (VECV- Volvo Eicher Commercial Vehicles) with EML as joint promoter of the commercial vehicles business.
Increasing demand for Royal Enfield
EML rides high on success of its Royal Enfield business. The brand has now been highly recognised and leading to exceptional growth in demand (6-8 months waiting period). EML is increasing capacity for Royal Enfield from existing ~70,000 units to ~150,000 units in CY13.
Commercial Vehicles to benefit from JV
Combined efforts of Volvo's technological proficiency and high quality standards, together with EML's distribution and low cost manufacturing will lead the road to success in HCV space
Global Manufacturing Hub
Volvo Group plans to make VECV’s plant in Pithampur the base for its futuristic Medium Duty Engine global Platform involving an initial investment in industry of Rs 2880 mn. The 5 and 8-litre engines will be produced and assembled in India.
Slowdown in the CV industry
The overall CV industry is facing a slowdown in line with the overall automobile sector and raising concerns of lower economic growth. As Eicher follows calendar year the overall impact of this slowdown will not be visible in its CY11 numbers. However, going forward we believe that Eicher will also witness pressure in this segment in CY12. Despite this, the long term story remains intact. With recovery in demand in late CY12 and CY13 and enhanced capacity we believe that Eicher is poised for strong growth in the long term.
Valuation & Recommendation
Although, the final results of the steps taken by the company will be clearly visible from Q1CY13 onwards, we believe that the company has taken the right steps in the right direction and the initial success signs are visible.
Considering the robust earnings growth and strong balance sheet, we believe that EML will continue its growth story in the coming years.
At CMP, the stock is trading at P/E of 14.8x CY11E, 12.2x CY12E and 11.1x CY13E. Though the near term outlook for the stock is slightly subdued, we believe that the stock can be ‘accumulated on decline’ from a long term perspective. On consolidated basis cash per share comes to Rs 629.
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