Q4FY18 results
Key positives: Improved RE EBITDA margins; Improved VEC performance
Key negatives: Impairment expenses from the Polaris JV
Impact on Financials: We largely maintain our estimates
Valuation and View
The RE franchise continues to expand its appeal to premium commuters, led by high brand equity and little competition in its niche segment. VECV is equally well placed to take advantage of a potential recovery in the LCV space. The on-going phase of multi- year, well above industry CAGR growth (FY17-20E EPS CAGR 26%) justifies current valuation of ~24x FY20 EPS. Maintain Outperformer with a SOTP based TP of Rs35,000.
Eicher Motors is engaged in the Indian automobile industry. Its 50-50 joint venture with the Volvo group, VE Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel-efficient commercial vehicles of modern technology, engineering components and provides engineering design solutions. Co. manufactures and markets Royal Enfield motorcycles and exports its bikes to over 25 countries including developed countries such as U.S., Japan, U.K. and several European countries. Co.'s business activities fall within a single business segment, automobile products and related components.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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