Singapore: Shares of Eicher Motors Ltd, which have soared almost 8,000% in the past decade, have hit a sweet spot, says Goldman Sachs Group Inc.
The stock is down 16% from its 8 September record of Rs33,483.95 even as the broad market posted a fresh record. Eicher’s retreat has pushed down the valuation to below its five-year average and presents a buying opportunity, according to analyst Pramod Kumar.
While the street took Eicher’s sequentially flattish third-quarter sales as signs of demand saturation for Royal Enfield—a British wartime motorcycle brand—the moderation was mainly due to plant rejig and model year change, Kumar wrote in a 18 January note. He added the stock to regional conviction list with a target price of Rs35,208, implying a 26% gain from Friday’s close, when it had a market value of about $12 billion dollars.
Network expansion and new models will lead to Eicher’s revenue and operating profit compounding at 25% and 30% respectively, over the fiscal 2017-2020 period, according to the note.
Eicher Motors is the best-performing company on the NSE Nifty 50 Index over the past 10 years, and one of the gauge’s two members with a five-digit price tag on its shares. livemint