- Eicher Motors stock surges 4% on UBS ‘buy’ upgrade, reaching Rs 3,863 in morning trade.
- UBS raises price target to Rs 5,000, implying a 34.5% upside potential.
- Competitors’ lacklustre performance aids Eicher’s dominance despite new launches.
- Market share in premium segment rises to 45% in Q3FY24.
- Anticipated launch of the Roadster to bridge performance gap, featuring Royal Enfield’s first liquid-cooled engine.
- UBS projects a robust rebound in exports for FY25-FY26, anticipating 25% growth.
Eicher Motors Limited shares surged 4% in morning trading on March 20, boosted by a substantial upgrade from global brokerage UBS. The stock jumped when UBS upgraded its rating to ‘buy’, with a potential upside of up to 35%. This spike was attributable to the company’s strategic product launches and its competitors’ reduced market performance.
UBS’s Positive Outlook and Price Target :
At 9:50 a.m., Eicher Motors stock was trading at Rs 3,863, up 4 percent from the previous close. UBS analysts upped the price objective for Eicher Motors shares to Rs 5,000, representing a 34.5 percent increase from its previous closing price.
Competitors’ Lacklustre Performance :
Despite aggressive pricing strategies, recent releases by competitors such as Harley-Davidson and Bajaj Auto’s Triumph have failed to create significant commercial traction. As of February 2024, Harley and Triumph had launched a total of 4,000 models, which was much lower than expected. UBS emphasises the inability of these newcomers to challenge Eicher’s supremacy, noting Royal Enfield’s distinct blend of quality, emotion, and brand loyalty as impossible to reproduce.
Eicher Motors’ Market Dominance :
Despite increased competition, Eicher Motors has been able to preserve and even increase its market share in the premium motorbike class. According to SIAM data, the company’s market share rose from 42% in Q2FY23 to 45% in Q3FY24.
Roadster: Bridging Performance Gaps :
Eicher Motors is preparing to launch a new motorbike called the “Roadster” in order to strengthen its market position even more. Analysts believe that this model will successfully close the performance gap noticed when compared to competitors like as Harley Davidson and Triumph. The Roadster has industry-leading performance and features Royal Enfield’s first liquid-cooled engine. This innovation is expected to solve issues about engine heating, particularly in hot areas and high traffic. UBS believes that the Roadster, together with potential future incarnations, will boost replacement demand within Royal Enfield’s existing 350cc customer base.
Export Growth Outlook :
UBS forecasts a strong return in exports in FY25-FY26, led by the Himalayan 450 ramp-up, the introduction of new 650cc models, and a broader recovery in demand in important export countries. UBS anticipates a 25% increase in export demand for FY25-26, compared to a 23% fall in FY24.
Future Prospects and Conclusions :
In summary, UBS believes Eicher Motors can outperform the industry in terms of volume growth over the medium term. Eicher Motors is well-positioned for long-term growth, thanks to a robust pipeline of planned launches and a favourable market situation in which key competitors have already revealed their products. Furthermore, the company’s emphasis on innovation, as seen by the impending Roadster model, demonstrates its determination to preserve its market leadership position. With expected average selling prices surpassing industry trends, led by new platform releases and several 650cc offers, Eicher Motors is primed for continuing success in the luxury motorcycle category.