Accumulate Eicher Motors Ltd For Target Rs.7,580 by Prabhudas Liladhar Capital Ltd
Strong Quarter with Stable Demand
EIM reported decent Q4FY26 consol numbers slightly above street estimates as it continued dominating the middle-weight motorcycles which itself is driving growth in the motorcycle industry. With new launches across the 250cc-750cc segment across the globe, premiumization, brand building campaigns and with multiple cost levers in place it aims to sail through the geopolitical and supply chain issues with focus on longterm growth and value creation. We estimate revenue/EBITDA/APAT CAGR of 12.6%/13.4%/14.9% over FY26-28E and retain ‘ACCUMULATE’ rating with TP of INR7,580 (previous INR7,700). We value the core business at a P/E of 30x (previously 32x) basis FY28E standalone EPS and VECV business at 10x EV/EBITDA FY28E.
Consol revenue for Q4 at INR60.8bn (+16.0% YoY, -0.6% QoQ):
It beat BBGe/PLe by 1.9%/2.2%. Gross margin was 44.4% (+20bps YoY, flat QoQ). EBITDA at INR15.1bn (+20.4% YoY, -2.8% QoQ) translated to a margin of 24.9% (+90bps YoY, -60bps QoQ) missing BBGe marginally by -10bps (met PLe). PAT grew +11.6% to INR15.2bn (incl. share of JV & associates) and was +4%/-1.5% away from BBGe/PLe. For FY26, consol operating revenue was INR234.1bn (+24.0% YoY), EBITDA INR57.9bn (+22.8% YoY); EBITDA margin, 24.7% (-25bps YoY); and adj PAT, INR55.6bn (+17.4% YoY).
VECV Q4 consol revenue at INR82.8bn (+16.0% YoY):
EBITDA was INR9.22bn (+25.8% YoY) translating to EBITDA margin of 11.4% (+90bps YoY), and PAT at INR5.96bn (+30.4% YoY). VECV maintained leadership position in LMD trucks (5-18T), while in Eicher HDT its volume grew 14.1% YoY and a market share of 9.1%. Exports saw strong growth of 35.6% amid geopolitical challenges
Confident in mitigating cost pressures:
Commodity inflation of 90bps in Q4 was offset by price hike in Jan’26 (70bps) and value engineering and variant mix (20bps). The management expects further 3-3.5% of commodity increase in Q1FY27, half of which has been covered by the 1.75% price hike taken in Apr’26. The management expressed confidence in mitigating most of the balance impact by further cost reduction efforts and operating leverage. VECV similarly took ~2% price hike in Apr’26 to partially offset cost pressure.
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