Eicher Motors shares rallied 9% to its 52-week high on Friday as the analysts turned upbeat on the Royal
Enfield maker and ignored the steep decline in the net profit of the September quarter.

Some gains have been given up though. It traded at Rs 2,500 on Tuesday down one-and-a-half % in the bullish market.

The stock rallied nearly 10% on Friday to hit a 52-week high at Rs 2,587. Analysts have placed on an optimistic lookout for the stock.

In the past decade, the stock has delivered a 1900% gain. But in the past few years, it has languished and declines more than 17% in the past 3 years. But in this year-to-date period, the stock went 12% up.

The September quarter saw the mutual funds cut their holdings by 236 basis points in the auto major. The holdings of the foreign institutional investors upped by 121 bps to 28.16%.

For the quarter ending September 30, Eicher Motors posted a 40% year-on-year drop in the net profit at Rs 343.34 crore on Thursday.

The price target on the stock was raised by Motilal Oswal to Rs 2,670 while maintaining a ‘buy’ rating and said that despite the trailing in terms of volume recovery due to supply-side issues, the company’s performance has been strong.

“Despite cost inflation (BS6 and precious metals), gross margins per unit were stable year on year. Strong bookings and inquiries, a positive initial response to Meteor range of bikes and normalised production are expected to support volume recovery going forward,” the brokerage said.

A buy rating and raised price target was maintained by Jefferies on the stock from Rs 2500 to Rs 2900 by raising FY21-21 EPS estimates by 4-9% by factoring higher Royal Enfield volumes and margins.

“We believe RE offers a strong long-term growth outlook given the differentiated products, strong franchise and tailwind from industry premiumisation,” the brokerage said.

The ‘accumulate’ rating on the stock was retained by Prabhudas Lilladher as it raised its price target from Rs 2,291 to Rs 2,598 citing RE’s under-penetration in the major motorcycling states.

The company has posted a 161% strong revenue growth sequentially though the revenue growth has been flat on a year-on-year (YoY) basis.

Improvement in performance sequentially has largely been due to improved consumer demand was said by the DVP and Equity Strategist at Angel Broking, Jyoti Roy.

“While second quarter numbers have been tepid, the management commentary has been positive as they highlighted that booking numbers have been ahead of pre-Covid levels and the company has a robust order book, which bodes well for growth in the next quarter,” he said.