Shares of Eicher Motors, the parent company of Royal Enfield, surged almost 4% on Tuesday, making it the top performer on the NSE Nifty 50. The stock was trading at Rs 3,500 as of midday, marking a 3.35% increase from its closing price on Monday.
This upward trend followed global brokerage firm Jefferies expressing a bullish outlook on Eicher Motors’ prospects. The optimism stemmed from reduced competition concerns, rising demand for two-wheelers, Eicher Motors’ premium offerings aligning with Indian consumers’ changing tastes, and growth in the company’s exports.
Jefferies further upgraded its target price for Eicher Motors to Rs 4,150 from the previous Rs 4,000. This revised target price suggests a potential 22.5% rise in the stock’s value from its closing price on Monday.
The brokerage firm also underscored Royal Enfield’s strong position to capitalize on the potential surge in demand for two-wheelers in India. The motorcycle brand that Eicher Motors owns is well-known for its distinctive offerings and strong brand reputation. As Indian consumers increasingly seek premium bikes, Royal Enfield stands to gain.
Regarding valuation, Jefferies adjusted its assessment of Royal Enfield to 25 times its price-to-earnings ratio (PE), up from the previous estimate of 24 times PE. The commercial vehicle business is valued at 5.5 times its price-to-book ratio (PB) for FY25.
It’s important to note that these views and recommendations are those of Jefferies and potential investors are advised to consult with a qualified broker or financial advisor before making any trading or investment decisions.