Eicher Motors‘ share price surged as much as 7% on the National Stock Exchange to a high of Rs 7,805, intra-day. This jump in the stock price came after the company reported its quarterly results.
However, brokerages are divided on the next strategy for the stock.
Jefferies on Eicher Motors
Jefferies raised the target price on Eicher Motors to Rs 8,800 from Rs 8,650, implying an upside of 21% from the current market price. The brokerage firm has retained a ‘Buy’ rating on the stock.
Eicher Motors’ Q FY26 EBITDA and net profit rose 25% and 30% YoY, in line with the brokerage’s estimates. Royal Enfield’s volumes grew 21% YoY while EBITDA margin expanded 170 basis points QoQ to a six-quarter high. Royal Enfield volume growth has accelerated to 25% in YTD-FY26, and its expanding capacity by 67% over two years.
“We expect Royal Enfield to be a key beneficiary of rising two-wheeler demand and premiumisation, while its toughest phase of competition as well as margin concerns are behind,” said Jefferies. The international brokerage house has raised FY27-28 EPS by 3-4%.
CLSA on Eicher Motors
Similarly, CLSA raised the target price on Eicher Motors to Rs 8,066 from Rs 7,836, implying an upside of over 11% from the current market price. The brokerage has maintained its ‘Outperform’ rating on the stock.
Eicher Motors’ standalone EBITDA margin came in at 26.6% (up 167bps QoQ), beating the brokerage’s estimate by almost 200 bps, as its gross margin improved 94 bps sequentially.
“We believe Eicher Motors is well-placed in terms of near-term growth driven by strong momentum in the domestic market, especially post-GST rate cut amidst the premiumisation
trend and refresh launches,” said CLSA. “We built in a 12% volume CAGR for Royal Enfield over FY26-28.”
Additionally, the brokerage is positive on the commercial vehicle cycle, which should bode well for VE commercial vehicles (VECV).
Citi on Eicher Motors
The global brokerage house Citi also increased the 12-month price target to Rs 8,300 from Rs 8,200, implying an upside of 13.5% from the current market price.
The company’s outlook is very buoyant, and management noted that footfalls, bookings and conversions have seen a sharp increase post GST cuts. The management has announced a capacity expansion plan to increase capacity from 1.45 million currently to 2 million by FY28 (Rs 9.58 billion expected capex over two years).
“We maintain Buy. Volumes and margins are both witnessing encouraging trends. We have a 90-D +ve Catalyst Watch open on Eicher Motors,” said Citi. “We tweaked our EBITDA estimates due to better ASP and margins. However, increases in earnings are dampened due to higher depreciation (large capex).”
JM Financial on Eicher Motors
The domestic brokerage house JM Financial set the new target price at Rs 7,050, implying a downside of 3.4% from the current market price. It has retained a ‘Reduce’ call on the stock.
Royal Enfield’s domestic business continued to perform well in the quarter under review, with volumes up 24% YoY. However, the international market remained challenging, as reflected in a 5% YoY decline in volumes.
Management remains cautiously optimistic amid global macro uncertainties. In the domestic market, Royal Enfield has continued its marketing and brand‑building efforts, which have started to yield results.
Also, the company is likely to face capacity constraints in early FY27 before the new capacity becomes operational.
“Further, RM inflation, aggressively priced new launches, and elevated marketing spends are likely to exert pressure going forward. Additionally, ramp‑up costs associated with new capacity will add to the pressure,” said JM Financial.
Overall, analysts remain divided on its long-term valuation for Eicher Motors. Rising input costs and capacity constraints are expected to cap profit margins through FY27.