MOSL: EICHER MOTORS (Buy)-Op performance in-line-RE margins stable-VECV margin beats estimate
​Eicher Motors: Op performance in-line; RE margins stable; VECV margin beats estimate
(EIM IN, Mkt Cap USD12.2b, CMP INR30,083, TP INR34,722, 15% Upside, Buy)
- Consol. revenue grew ~23.5% YoY to ~INR21.7b (est. of INR22.1b), with EBITDA growth of 26% YoY to INR6.8b (est. of INR7b). However, higher tax restricted consol. PAT to INR5.2b (est. of INR5.5b) – growth of 25%.
- RE’s net realization declined 2% QoQ (+1% YoY) to ~INR106.7k (est. of INR108.8) due to pass-through of input tax credit. EBITDA margin expanded ~50 QoQ (+60bp YoY) to 31.9% (est. of 31.7%), led by lower RM cost (despite commodity pressures) due to efficiency gains. PAT grew 23% YoY to INR4.9b.
- VECV’s realizations grew 6% YoY (flat QoQ) to INR1.56m (est. of INR1.59m). EBITDA margin expanded 200bp YoY (+90bp QoQ) to 9.2% (est. of 8.5%), led by efficiency gains and operating leverage. PAT grew 44% YoY to INR950m (est. of INR1.1m).
- Earnings call highlights: a) Waiting period stable at 1.5-2 months for Classic 350; SSG bookings is in early teens. b) New 650cc Interceptor & Continental GT would be launched in Apr-18, starting with Europe and the UK. c) Guided for producible capacity of 825k/900k for FY18/19. d) Discounting levels in M&HCVs are very high. It traded market share for profitability in 2Q.
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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