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Eicher Motors Q2 Results: Waiting periods coming down, valuations expensive; maintain REDUCE

Equirus Securities | 20 Nov, 2017  | Follow Author | Add to my Favourites 
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Eicher Motors’ (EIM) 2Q results came marginally below EE due to lower-than-expected ASPs, which declined 2% qoq. Royal Enfield (RE) recently launched its first twin-cylinder models, Interceptor 650 Roadstar and Continental GT 650 Café Racer, based on 648cc engine; management believes these models would help it garner volumes in export markets, similar to what Classic 350 did in India. Our channel checks indicate that waiting periods have come down over last one year, but bookings are still more than monthly sales. We largely maintain estimates and reiterate REDUCE on the stock due to expensive valuations. Our Dec’18 TP stands at Rs 30,516 (vs. Rs 30,833 earlier).

Waiting periods reduce on most RE bikes: Last year around the same time, waiting periods on Classic 350 was around 2-3 months, while other models were available in 15-30 days. Our recent channel checks indicate that waiting periods on most models are in the range of 20-30 days, and at some places 45 days. However, recently-launched color options, Classic 500 Stealth Black and Classic 350 Gunmetal Grey, have a 2-3 month waiting period. Most dealers indicated that bookings are still higher than retail sales during a month.

Targeting export market with new twin-cylinder bike: EIM is primarily targeting ASEAN and Latin American markets with its new twin-cylinder bike, and expects it to yield similar results as Classic 350 in India. The 650cc bike also provides a larger range from 350cc-650cc to RE, in line with management’s stated 250-700cc target segment.

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27,689.40 -319.20
27,664.00 -366.50
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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.


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