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Eicher Motors gains 3%, hits new high; market cap nears Rs 1 trillion

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Shares of hit a new high of Rs 3,479, up 3.4 per cent on the BSE in Tuesday’s intra-day trade. In the past two weeks, the stock has rallied 12 per cent after the company reported a strong set of earnings for the June quarter (Q1FY23). It surpassed its previous high of Rs 3,457.70, touched on August 19, 2022.

A sharp rally in the stock price of has seen the market capitalisation (market-cap) of the company inche towards Rs 1-trillion mark. The market-cap of touched Rs 95,135 crore in the intra-day trade, and is 5.2 per cent away from the feat.

Eicher Motors is the listed parent of Royal Enfield (RE), global leader in the middleweight motorcycles segment (250cc – 750cc). In the past three months, the stock has outperformed the market by surging 27 per cent, as compared to 9 per cent rise in the S&P BSE Sensex.

In Q1FY23, Eicher Motors recorded total revenue from operations at Rs 3,397 crore, EBITDA at Rs 831 crore, and profit after tax at Rs 611 crore. Royal Enfield ended the quarter with its best ever performance in the international with total dispatches at 28,390 units, more than 62 per cent increase over 17,493 in the same period last year; and a 30 per cent increase over 21,787 units in Q4FY22.

According to the management, with the support of government spending in infrastructure and pent-up fleet replacement, there are huge opportunities in the market, and the Indian Commercial Vehicle market is on the recovery path.

“Given its dominant position in the over 250cc market in India, RE is likely to be a key beneficiary of the premiumisation trend in India. It targets to launch multiple new products over the next 18-24 months, which would provide an upgrade option to its existing customers. Also, given the sharp price increase in RE over the last few years, it now targets to secure a balance between growth and profitability,” analysts at HDFC Securities.

The recent launch of ‘Hunter’ is a case in point, wherein incremental capital employed would be negligible and, hence, the RoCE on the product would be impressive, despite its aggressive pricing. On exports, RE is seeing a strong demand pull from its key . Management believes that, in exports, it is at a stage where they were in the domestic market in FY11, and expect to see sustained growth in the coming years, the brokerage firm said in its result update.

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