Academic research report – Not a recommendation

Equity Research Report

Eicher Motors Ltd. Recommendation XXX

CMP 4873
About the Company Target Price XXXX
▪ Eicher Motors Limited is a multinational automobile company that
produces motorcycles and commercial vehicles ,headquarted in New
Delhi . Stock data as on(June 20,2024)
▪ As the worlds oldest continuously produced motorcycle brand ,Royal
Nifty 23,549
Enfield has been producing its unique motorcycles since 1901.Focused
on bringing back simple ,engaging and easy to use motorcycles .Royal 52 Weeks H/L (INR) 4912/4857
Enfield operates in India and over 60 countries globally, with modern
Market Cap (INR) 1.35T
development facilities in Leicestershire ,UK and Chennai ,India.
▪ Royal Enfield has evolved into an experiential brand .Royal Enfield Dividend Yield (%) 1.09%
motorcycles combine modern elements with the brands heritage ,earning NSE Code Eichermot
them immense enthusiasm among motorcyclists across the globe .
▪ In addition to motorcycles ,Eicher also has a joint venture with Swedish
AB Volvo , Volvo Eicher Commercial Vehicles Ltd.(VECV) which has
pioneered the modernization of commercial vehicles in India and other
developing countries .
▪ VECV has a full range of trucks and buses from 4.9-55 tonnes and its
integrated manufacturing facility in Pithampur ,Madhya Pradesh is the
Volvo Groups global hub for medium duty 5 litre and 8 litre engines.
▪ Eicher Motors is listed on the BSE and the National Stock Exchange and
has been a part of the NSEs benchmark Nifty 50 index since April
1,2016.
Absolute Returns(%)
Q4 FY24Key Highlights
▪ March 31 2024 is eighth consecutive quarter of highest revenues at Rs.4256 1 Year 39.52%
crores and highest profit after Tax at Rs.1070 crores. 3 Year 80.72%
▪ In the same quarter of FY 2022-2023 Eicher Motors Ltd.(EML) reported
total revenue of Rs. 4256 crores , an increase of 11.87 % above Rs. 3804 5 Year 146.45%
crores . EBITDA was Rs.1129 crores up 20.88% as compared to Rs. 934
crores in the same quarter of the previous year financial year . Shareholding Pattern as on (June 20,2024)
▪ During the quarter ,Royal Enfield recorded sales of 2,27,925 motorcycles
Promoters 49.20%
,up by 6.17% from 2,14,685 motorcycles sold during the same period in FY
2022-23. DII 11.10%
▪ Eicher Motors launched three spectacular motorcycles including the all new
FII 29.00%
Himalayan built ground up on the brand new Sherpa 450,liquid cooled
engine paltform . VECV have recorded the highest ever sales of Eicher Public Shareholding 10.80%
Trucks and buses ,Volvo Trucks ,VE Powertrain , Components and Power
solutions . Also , Eicher Motors has commenced the sales of EV trucks and
the global unveil of the new electric first small commercial vehicle. With an
expanding product range , backed by cutting edge connected and efficent
solutions , Eicher Motors has great expansion potenial .

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 Academic research report – Not a recommendation

Eicher Motors Ltd.

Global Economy Global GDP Growth (%)

The global economy will grow steadily in the coming years, with a GDP
growth rate of 3.2% in both 2024 and 2025. This forecast aligns with the
growth rate observed in 2023, indicating a period of stabilization following World

the economic disruptions caused by the COVID-19 pandemic and ongoing

geopolitical tensions. Advanced economies are expected to see a slight India
increase in growth, from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025,
driven by improved consumer confidence, easing supply chain
China
disruptions, and supportive monetary policies. In contrast, emerging
markets and developing economies are projected to grow at 4.2% in both
2024 and 2025, a slight decrease from the 4.3% growth rate in 2023. United Kingdom

Inflation trends show a global decline, with the IMF forecasting a drop
from 6.8% in 2023 to 5.9% in 2024 and further down to 4.5% in 2025. This Japan
reduction is attributed to the tightening of monetary policies by central
banks worldwide, which is expected to moderate demand and curb price United States
increases. In advanced economies, inflation is expected to fall more
rapidly, reaching levels close to central bank targets due to stronger
Europe
monetary policy frameworks and less volatile supply conditions.
Conversely, inflation in emerging markets and developing economies is
0.00% 2.00% 4.00% 6.00% 8.00%
projected to decrease more slowly due to persistent supply-side
constraints, currency depreciation, and higher pass-through of global 2024 Projected 2023 Actual 2022 Actual
commodity prices.
Source : IMF
Source : IMF,OCED
Indian Economy
2022-23 7%
India witnessed a 7.2% growth in FY 23 which is significantly above the
X global average growth rate of 3.5%. India surpassed U.K. by becoming
2021-22 9% 5th largest economy in FY23.
-6% 2020-21 Despite the global economic challenges viz. post COVID impact, supply
chain disruption, high inflation & interest rate hikes, India economic
2019-20 4% was resilient towards growth.
2018-19 6%
India's strong economic growth is driven by some important factors such as
fast pace digitization, prudent fiscal policy, government initiatives, robust
2017-18 7% local demand, push for the infrastructure development, stabilizing the
2016-17 8%
prices of the commodity prices and
resilient supply chain.
2015-16 8% India is set to become the world's third-largest economy by FY28, two years
2014-15 7%
earlier than projected, according to economists at SBI Research. The team
said the figures, which would see India surpass Japan and Germany and
2013-14 6% account for 4% of the global GDP share, were achievable with growth rates
2012-13 5%
anywhere between 6.5% to 11.5%.
CPI inflation for 2024-25 is projected at 4.5 per cent with Q1 at 4.9 per
cent; Q2 at 3.8 per cent; Q3 at 4.6 per cent; and Q4 at 4.5 per cent.
Source : MOSPI

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 Academic research report – Not a recommendation

Eicher Motors Ltd.

Indian Automotive Industry

India enjoys a strong position in the global heavy vehicles
market as it is the largest tractor producer ,second largest bus
manufacturer and third largest heavy truck manufacturer in
the world . India's annual production of automobiles in FY23
was 25.9 million vehicles.India has a strong market in terms
of domestic demand and exports. In In January 2024, the total
passenger vehicles sales reached 3,93,074. Growth of 14%
compared to January 2023.

In the third quarter of 2023-24,total production of passenger

vehicles,commercial vehicles ,three wheeler,two wheeler, and
quadricycles was 7.13 million units.The electric vehicle
market is estimated to reach Rs.50000 crore in India by
2025.Indian Automotive Industry is targeting to increase the
export of vehicles by five times during 2016-26

To keep up with the growing demand ,several auto makers

have started investing heavily in various segments of the
industry during the last few months. India is on track to
become the largest EV market by 2030 ,with a total
investment opportunity of more than dollar 200 billion over
the next 8-10 years .
The government of India encourages foreign investment in the
automobile sector and has allowed 100% FDI under the
automatic route.The automobile industry is dependent on
various factors such as the availability of skilled labour at low
cost,robust R and D centers ,and low cost steel production
.The industry also provides great investment opportunities and
direct and indirect employment to skilled and unskilled labour
.The electric vehicles industry is likely to create five crore
jobs by 2030 .

Source : IBEF

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Academic research report – Not a recommendation

Eicher Motors Ltd.

Concall Analysis
Financial Performance
◼ Compared to ₹ 14,442 crores reported for FY 2022–2023 Eicher Motors Ltd. – EML's total revenue from
operations increased by 14.50% to ₹ 16,536 crores.
◼ Compared to FY23's ₹ 3,444 crores, EBITDA increased by 25.65% to ₹ 4,327 crores.
◼ Profit after tax increased by 37.31% to ₹ 4,001 crores from ₹ 2,914 crores.
Market Performance
◼ Eicher Motors motorcycle market share is almost about 7.2 % .In the international market it recorded a
sale of 77,209 units .It also ventured into a few nations like as Turkey,where there is a strong market for
motorcycle.
◼ Market share of Light and medium duty trucks reached from 25.3% to 34.6% ,Heavy duty trucks reached
from 2.0% to 9.2% ,Share of buses reached from 5.3% to 21.6% in 15 years .
◼ Eicher Motors American market share is 8% ,Asia Pacific market share is 9% and European market share
is 9%.

Strategic and Operational performance

◼ Road test and dynamometer testing done for 100% of vehicles ,Semi automatic testing of 100% engines to
ensure all the critical parameters ,46 robots are used to improve transfer efficiency and paint finish quality.
◼ 340 Machining centers across plants ,Use of welding process and robotic washing in fuel tanks fabrication
.
◼ Eicher Motors have overall 933 distribution touch points ,by addition of 125 touch points in FY24.
◼ 34 configurations increased in FY24, for a total of 270 networks.
◼ At more than 265 cities across the country ,site support has continuously attained uptime performance
across a variety of applications .
◼ Upskilling drivers at client sites by providing theory and practical training to over 8000 drivers.

Future Plans
◼ Providing segment specific multi fleet solutions for VECV customers.
◼ Supply of telematics and IOT device based solutions with IP control and customer ownership with VECV.
Creating a revenue of 250 crores from multi fleet telematics and IOT solutions .

Corporate Social Responsibility

◼ Eicher Motors replacing high energy intensity blowers with coolant tanks in the planetary buffing process.
◼ Perodically monitors its ambient air quality to maintain emissions below limits set by Tamil Nadu
pollution control board .
◼ Achieved zero waste to landfill by implementing the principles of circular economy and Reduce,Reuse
and Recycle across all activities.
◼ Eicher Motors fulfilling the sustanability development goal number 6,7,9,12 and 15.

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 Academic research report – Not a recommendation

Share
Eicher Motors Ltd.

Shareholding Pattern

The shareholding pattern of Avenue Super Marts

from March 2022 to March 2024 reveals
constant: Promoter holdings have remained
largely stable at around 49.2%, ensuring strong
control. Domestic Institutional Investors (DII)
have shown a consistent increase from 9.8% to
11.1%, indicating growing confidence in the
company's prospects. Conversely, Foreign
Institutional Investors (FII) shareholding has
gradually decreased from 30.3% to 29.0%,
suggesting minor fluctuations.Public
shareholding also remains stable around 10.8%.
Overall, the promoters holding , FII and DII
shows the strong fundamentals of the company.

Particulars Mar-24 Dec-23 Sep-23 Jun-23 Mar-23 Dec-22 Sep-22 Jun-22 Mar-22

Promoter 49.20% 49.20% 49.20% 49.20% 49.20% 49.20% 49.20% 49.20% 49.20%

FII 29.00% 30.30% 28.90% 30.30% 28.60% 29.90% 30.30% 29.50% 29.20%

DII 11.10% 9.80% 10.60% 10.10% 11.30% 10.10% 10.10% 10.20% 10.00%

Public 10.80% 10.80% 11.40% 10.40% 10.90% 10.90% 10.50% 11.10% 11.50%

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Academic research report – Not a recommendation
Consolidated - Balance Sheet
Particulars Mar 24 Mar-23 Mar-22 Mar-21 Mar-20

SHAREHOLDER'S FUNDS

Equity Share Capital 27.38 27.35 27.34 27.33 27.3

Total Share Capital 27.38 27.35 27.34 27.33 27.3

Reserves and Surplus 18,018.15 14,962.93 12,580.66 11,410.75 9,953.63

Total Reserves and Surplus 18,018.15 14,962.93 12,580.66 11,410.75 9,953.63

Total Shareholders Funds 18,045.53 14,990.28 12,608.00 11,438.08 9,980.93

NON-CURRENT LIABILITIES

Long Term Borrowings 163.46 62.96 0 0 0

Deferred Tax Liabilities [Net] 461.08 291.31 220.06 221.5 252.15

Other Long Term Liabilities 684.43 516.05 350.44 247.66 170.87

Long Term Provisions 175.02 102.46 39.13 22.56 21.2

Total Non-Current Liabilities 1,483.99 972.78 609.63 491.72 444.22

CURRENT LIABILITIES

Short Term Borrowings 112.12 132.74 58.84 157.41 144.43

Trade Payables 2,090.13 1,810.44 1,788.08 1,718.13 1,027.65

Other Current Liabilities 1,296.61 1,135.92 985.79 663.08 776.28

Short Term Provisions 99.55 155.48 150.65 90.19 76.21

Total Current Liabilities 3,598.41 3,234.58 2,983.36 2,628.81 2,024.57

ASSETS

NON-CURRENT ASSETS

Tangible Assets 3,469.48 2,225.78 2,094.44 2,092.13 2,192.69

Intangible Assets 0 464.21 329.84 341.17 184.83

Capital Work-In-Progress 0 77.75 133.98 63.91 26.75

Intangible Assets Under Development 0 394.32 370.8 250.38 285.42

Fixed Assets 3,469.48 3,162.06 2,929.06 2,747.59 2,689.69

Non-Current Investments 13,346.04 12,100.77 7,295.89 2,826.06 3,236.27

Deferred Tax Assets [Net] 12.8 0 0 0 0

Other Non-Current Assets 2,148.28 251.58 356.7 176.48 149.17

Total Non-Current Assets 18,976.60 15,514.41 10,581.65 5,750.13 6,075.13

CURRENT ASSETS

Current Investments 180.92 219.89 424.69 1,076.08 2,512.50

Inventories 1,409.64 1,278.44 1,132.40 874.6 572.35

Trade Receivables 373.78 368.92 978.83 158.16 86.76

Cash And Cash Equivalents 146.31 857.12 2,722.47 5,830.36 2,950.59

Short Term Loans And Advances 0 588.94 0 459.16 0.12

Other Current Assets 2,040.68 369.92 360.95 410.12 252.27

Total Current Assets 4,151.33 3,683.23 5,619.34 8,808.48 6,374.59

Total
Prepared by: Assets
Stuti Jain 23,127.93 19,197.64 16,200.99 14,558.61 12,449.72 6
Academic research report – Not a recommendation

Eicher Motors Ltd.

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 Academic research report – Not a recommendation

Eicher Motors Ltd.

Revenue
The company demonstrated strong revenue growth from
FY20 to FY24, with sales rising from 9,071.07 crore to
17,246.48. Despite a slight dip in FY21 due to Covid 19,
sales rebounded significantly, growing by 16.6% in FY22
and 39.0% in FY23. The momentum continued with an
17.24% increase in FY24. Over the last 5 years revenue has
grown at a rate of 10.05% While the Industry has grown
with the average rate of 7.5% . The company's enduring
expansion highlights its robust business strategy and adept
handling of market obstacles, setting it up for future growth

and wealth generation.

Inventory
In general, the company's revenue and inventory increase are
out of pace. Notably, during COVID in FY21, inventory
levels soared as a result of a decline in sales.
The company has managed to increase revenues
after covid and leveled inventory build-up when the situation
improved. The companys inventory day is 57 , which is
significantly higher than the industry median .Motorcycles
and commercial vehicles may have lengthier lead times from
manufacturing to delivery due to their production cycles.
Keeping larger inventory levels may be necessary in order to
guarantee order fulfillment on time.

Margins
EBITDA showed a moderate increase trend, rising from
2430.34 crores in FY20 to 4970.02 crores in FY24. Due to
COVID-19, the EBITDA margin varied marginally over the
years, beginning at 25% in FY20 and falling to 19.6% and
19.9% in FY21 and FY22. But in FY23 and FY24, the
margin increased to 23.8% and 28%, respectively. This
variation shows how resilient the business has been in
sustaining profitability under various cost constraints and
market circumstances. Eicher Motors' ability to control
operational costs and propel growth in its core business
operations is demonstrated by the steady improvement in
EBITDA and overall stability in EBITDA margins.

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 Academic research report – Not a recommendation

Vjv
Eicher Motors Ltd.

Peer Stock Performance (1Y)- Indexed

S.No. Name CMP Mar Cap P/E PEG CMP ROE % ROCE % EV / Debt Dividend
Rs. (in Crs) / BV EBITDA (Crs) Yield %
1 Eicher 4845 1315226.9 33.8 2.6 7.3 22.42 29.61 19.85 419.4 1.05
Motors
2 Hero 5452 116044 31.03 9.2 5.7 17.95 23.97 15.58 606.4 2.54
Motocorp
3 Tata 961.80 364189.9 9.12 3.3 15.8 30.12 22.42 44.4 16000 0.61
Motors
4 Bajaj 9602.25 278111.90 36.43 4.32 8.7 21.64 28.46 15.1 1785.9 0.83
Auto
5 M and M 2839.95 350837.10 29.07 0.96 5.3 16.16 18.53 10.55 1070 0.74

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Eicher Motors Ltd.

Analyst Coverage Universe

Date Research house Target Price at record Type

22-Jun-24 Consensus Share 4497 4845

13-May-24
ICICI Direct 5500 4845 Buy

13-May-24 Axis Direct 5135 4845 Buy

13-May-24 SMC Online 4657 4845 Accumlate

17-May-24 BOB Capital Mkt. 4633 4845 Hold

12-May-24 Emkay 3400 4845 Sell

14-Feb-24 Axis Direct 4250 4845 Buy

14-Feb-24 Prabhudas Liladhar 4100 4845 Accumlate

13-Feb-24 BOB Capital Mkt. 4045 4845 Neutral

Source: Trendlynem,

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