After its shares soared 41 percent so far this year, Eicher Motors Ltd., the parent company of Royal Enfield, became the fifth car company in India to join the exclusive club of Rs 1 trillion market capitalization (MCap).
Details about Eicher Motors has joined a company with a $1 trillion market cap:
With a market worth of Rs. 1.01 trillion, the stock reached a record high of Rs. 3,659.45 per share and increased by as much as 3.31 percent from its previous closing.
The ability of the company to grow its customer base in the face of numerous external headwinds, including a sharp increase in vehicle prices, supply chain limitations, poor customer sentiment, and limited volume growth visibility, had a significant negative impact on the company’s performance during the pandemic. From FY19 through FY22, the corporation saw an average 13 percent decline in volume growth.
Analysts reported that the company’s freshly released Royal Enfield brand Hunter 350 is receiving positive customer feedback. In August 2022, attendance and inquiries increased by 15-20%, with inquiries from new consumers accounting for 50% of all inquiries. Dealers predict that throughout the forthcoming holiday season, demand momentum will increase even further. Brokerage company Sharekhan predicts that, over the medium term, the Hunter 350 will increase Royal Enfield’s volume and makeup 13–15% of the company’s motorcycles.
An expansion in the size of the addressable market and improved operational efficiency in the company’s two-wheeler business, according to analysts, will help the firm recover quickly and kick its performance into high gear. Additionally, the company’s commercial vehicle division is prepared to significantly increase its contribution to consolidated PBT, driven by anticipated market share growth, escalating synergies with the joint venture partner (Volvo), and the advantages of operating leverage.
“We anticipate premiumization to increase once more in the two-wheeler market as the economy and supply restrictions return to normal. Royal Enfield is predicted to do well in the premium bike market. With a positive prognosis for the economy and significant earnings growth of 48.3 percent between FY22 and FY24, “said the Sharekhan study.
The stock has 35 “buy” ratings, zero “hold” ratings, and four “sell” ratings, according to Bloomberg.