Saturday, August 18, 2012


Revenue up 22% YoY, led by 62% YoY volume growth in motorcycles Eicher Motors reported top-line revenue at `15.9bn, up 22% YoY led by ~8% YoY volume growth in M&HCV. The company sold 11,979 medium and heavy commercial vehicles (M&HCV). It sold 27,244 motorcycles in 2QCY12, up 62% YoY.

Operating margins decline 180bps QoQ to 8.8%
The company’s operating margins declined 180bps QoQ to 8.8%. This was mainly led due to higher staff costs and other expenses. Staff costs was in line with expansion plans. The higher incentives to push sales led to higher other expenses. EBIDTA for the quarter was ` 1.4bn, up 11% YoY.

PAT reported at ` 760mn, flattish YoY
The company reported its PAT at ` 760mn. This was because of lower other income. The EPS for the quarter stood at ` 28.2.

View and valuation
Macro headwinds may affect the demand in the commercial vehicle segment. Accordingly, we estimate volume growth of 12% in CY13 in the CV segment. Its demand in the motorcycle segment continues to be strong with a waiting of almost 2-3 months. With supply issues being sorted, we expect this segment to grow 30% YoY. We also believe margins may remain stable at these levels. The stock is currently trading at a P/E of 13.9x CY14E. We recommend Accumulate.

To read report in detail: EICHER MOTORS