MOSL: EICHER MOTORS (Buy)-In-line-RE margin stable, VECV performance a big positive surprise
​Eicher Motors: In-line; RE margin stable, VECV performance a big positive surprise
(EIM IN, Mkt Cap USD10.5b, CMP INR25837, TP INR30402, 18% Upside, Buy)
- EIM reported in-line 4QFY17 results. Consol. PAT grew by ~34% YoY to ~INR4.59b (est. of ~INR4.63b) in 4Q and by 56% YoY to ~INR16.7b in FY17. The company declared a dividend of ~INR100/share for FY17 (similar to FY16, which, however, was a 15-month period).
- Royal Enfield (RE) EBITDA margin at 31.8%: Net realization increased 1.5% YoY (flat QoQ) to ~INR105.7k (est. of ~INR106.1k). EBITDA margin expanded ~180bp YoY (-40bp QoQ) to 31.4% (est. of ~32%), led by higher other expenses. Further, lower other income restricted adj. PAT growth to 8.5% YoY (to INR4.1b v/s est. of ~INR5.5b). FY17 PAT grew 49% YoY to INR15.6b.
- VECV’s margin expands on positive operating leverage: Realization increased ~11% YoY to ~INR1.48m (est. of ~INR1.5m) due to price hikes and an improved product mix. EBITDA margin expanded 370bp YoY (+130bp QoQ) to 8.2% (est. of 6.4%) led by positive operating leverage. Adj. PAT was ~INR1.16b (est. of ~INR674m). FY17 PAT grew ~12% YoY to ~INR3.4b.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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