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Results good; Outlook remains positive
Eicher Motor results are good. Although parent company (12% of consolidated sales) saw some decline on account of lower sales on Bullet motorcycle but subsidiary continue to perform well. Outlook continues to remain positive.
Key Highlights
Eicher Motors Ltd (EML’s ) consolidated revenues increased 26.8% YoY to Rs 1,568 crs in Q4CY11 against Rs 1,235 crs in Q4CY10 due to 25% YoY volume growth in the VE Commercial Vehicle (VECV) business and 28% YoY volume growth in the Royal Enfield business.
Lower sales of 2W led by the annual maintenance shutdown caused consolidated EBITDA margin to drop by 65 bps QoQ, although it improved by 7 bps YoY to 9.8%. EBITDA margin of the two-wheeler business improved by 90 bps YoY to 9.2% (but down 360 bps QoQ) whereas EBITDA margin for VECV remain flat YoY but dropped by 60 bps QoQ to 9.8%.
PAT grew 55.7% YoY to Rs 85.4 crs in Q4CY11 against Rs 54.9 crs in Q4CY10. This was led by 79.8% YoY increase in other income to Rs 42.89 crs and lower tax rate which was at 22.6% in the current quarter as compared to 27.3% in Q4CY10.
Management is guiding the 2W monthly production to reach 8,500 units per month by the end of CY12 vs the current levels of 7,000 units per month. Despite the mining sector-related issues affecting demand for heavy duty CVs, VECV volume was up at 2,180 units in Q4 CY11.
Valuation & Recommendation
Eicher Motors has posted good growth in both top-line as well as bottom-line for yet another quarter. As Eicher Motors enjoys the premium position in the industry by being the only manufacturer of premium segment bikes in India and having JV with world’s largest player in HCV segment, it is well poised to increase its market share.
Considering the robust earnings growth and strong balance sheet, we believe that EML will continue with its growth story in the coming years. In addition to that, the company enjoys strong financial health and cash position which has helped the company to maintain debt at comfortable zone. On consolidated basis the cash per share stands at Rs 633.5.
At CMP, the stock is trading at P/E of 13.2x CY12E and 11.3x 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 as we see potential upside in the stock.
Eicher Motors Ltd
Q4CY11 Result Update – 16 February 2012
Key Concall highlights The company has reported weaker sales volume in Jan 2012 (27% MoM decline). However it foresees no concerns on volume growth going ahead.
Management targets a run rate of ~5,500+ units per month in CV segment by end of 2012. Company has already achieved its target of ~1,000 units per month of Heavy Duty vehicles in December 2011 (978 units).
M&HCV bus segment has witnessed strong growth for Eicher against industry de growth in 2011. Company is striving to maintain this momentum in CY12. It is also planning to invest Rs 1.25bn in a facility dedicated to bus production starting early next year.
The demand for Royal Enfield continues to outpace supply with waiting periods of 6 – 12 months. Management targets to ramp up capacity to 8,500+ by end of 2012. Company has a strong pipeline of new launches which it plans to introduce beginning Q2 CY12. However, major uptick in production capacity is expected from Q1CY13 when its new plant begins operation.
The company has taken price hike of 1.5% taken in VECV and 3.2% in Royal Enfield in January 2012.
Volvo Eicher Commercial Vehicle (VECV) has lined up an investment of Rs 1,000 crs over the next three years for its various projects which include a bus body building plant as well as engine plant apart from new launches.
The engine plant, for which Rs 300 crs has been earmarked, is coming up in Dhar district of Madhya Pradesh. It will be commissioned in 2013 and will be the global hub for producing engines for Volvo group’s trucks and buses worldwide. Also, these engines will be used for Eicher’s heavy duty commercial vehicles. At present, the existing Pithampur plant produces about 40,000 engines a year and the new investment will add another 85,000 engines.
VECV is setting up a bus manufacturing plant at Dhar in Madhya Pradesh with an investment of Rs 125 crs in the first phase and will start production by Q2CY13 with a capacity to make 10,000 buses. Eicher’s market share in the bus segment has increased from 5.15% last year to 8.10% in Jan 2012.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Results good; Outlook remains positive
Eicher Motor results are good. Although parent company (12% of consolidated sales) saw some decline on account of lower sales on Bullet motorcycle but subsidiary continue to perform well. Outlook continues to remain positive.
Key Highlights
Eicher Motors Ltd (EML’s ) consolidated revenues increased 26.8% YoY to Rs 1,568 crs in Q4CY11 against Rs 1,235 crs in Q4CY10 due to 25% YoY volume growth in the VE Commercial Vehicle (VECV) business and 28% YoY volume growth in the Royal Enfield business.
Lower sales of 2W led by the annual maintenance shutdown caused consolidated EBITDA margin to drop by 65 bps QoQ, although it improved by 7 bps YoY to 9.8%. EBITDA margin of the two-wheeler business improved by 90 bps YoY to 9.2% (but down 360 bps QoQ) whereas EBITDA margin for VECV remain flat YoY but dropped by 60 bps QoQ to 9.8%.
PAT grew 55.7% YoY to Rs 85.4 crs in Q4CY11 against Rs 54.9 crs in Q4CY10. This was led by 79.8% YoY increase in other income to Rs 42.89 crs and lower tax rate which was at 22.6% in the current quarter as compared to 27.3% in Q4CY10.
Management is guiding the 2W monthly production to reach 8,500 units per month by the end of CY12 vs the current levels of 7,000 units per month. Despite the mining sector-related issues affecting demand for heavy duty CVs, VECV volume was up at 2,180 units in Q4 CY11.
Valuation & Recommendation
Eicher Motors has posted good growth in both top-line as well as bottom-line for yet another quarter. As Eicher Motors enjoys the premium position in the industry by being the only manufacturer of premium segment bikes in India and having JV with world’s largest player in HCV segment, it is well poised to increase its market share.
Considering the robust earnings growth and strong balance sheet, we believe that EML will continue with its growth story in the coming years. In addition to that, the company enjoys strong financial health and cash position which has helped the company to maintain debt at comfortable zone. On consolidated basis the cash per share stands at Rs 633.5.
At CMP, the stock is trading at P/E of 13.2x CY12E and 11.3x 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 as we see potential upside in the stock.
Eicher Motors Ltd
Q4CY11 Result Update – 16 February 2012
Key Concall highlights The company has reported weaker sales volume in Jan 2012 (27% MoM decline). However it foresees no concerns on volume growth going ahead.
Management targets a run rate of ~5,500+ units per month in CV segment by end of 2012. Company has already achieved its target of ~1,000 units per month of Heavy Duty vehicles in December 2011 (978 units).
M&HCV bus segment has witnessed strong growth for Eicher against industry de growth in 2011. Company is striving to maintain this momentum in CY12. It is also planning to invest Rs 1.25bn in a facility dedicated to bus production starting early next year.
The demand for Royal Enfield continues to outpace supply with waiting periods of 6 – 12 months. Management targets to ramp up capacity to 8,500+ by end of 2012. Company has a strong pipeline of new launches which it plans to introduce beginning Q2 CY12. However, major uptick in production capacity is expected from Q1CY13 when its new plant begins operation.
The company has taken price hike of 1.5% taken in VECV and 3.2% in Royal Enfield in January 2012.
Volvo Eicher Commercial Vehicle (VECV) has lined up an investment of Rs 1,000 crs over the next three years for its various projects which include a bus body building plant as well as engine plant apart from new launches.
The engine plant, for which Rs 300 crs has been earmarked, is coming up in Dhar district of Madhya Pradesh. It will be commissioned in 2013 and will be the global hub for producing engines for Volvo group’s trucks and buses worldwide. Also, these engines will be used for Eicher’s heavy duty commercial vehicles. At present, the existing Pithampur plant produces about 40,000 engines a year and the new investment will add another 85,000 engines.
VECV is setting up a bus manufacturing plant at Dhar in Madhya Pradesh with an investment of Rs 125 crs in the first phase and will start production by Q2CY13 with a capacity to make 10,000 buses. Eicher’s market share in the bus segment has increased from 5.15% last year to 8.10% in Jan 2012.
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