In this article, we can see Eicher Motors as a Potential Multibagger Stock as on September 2024.
| Company | Website | Location | Products | P&L |
| Positives | Negatives | Checklist | Summary |
Eicher Motors
Eicher Motors is the listed company in India and a leading player in the Indian automobile industry and the global leader in middleweight motorcycles.
Eicher Motors has a joint venture with Sweden’s AB Volvo to create Volvo Eicher Commercial Vehicles Limited (VECV). VECV is engaged in truck and bus operations, auto components business, and technical consulting services business. SIDDHARTHA LAL is the current Managing Director and CEO.
Website
Location
Eicher Motors has 2 technology centers, one each at Leicestershire, UK and Chennai, India.
Products & Services
- Eicher DragonHook
- Eicher multix polaris
- Eicher Trucks
- Eicher Buses
- Eicher Tractors
- Royal Enfield
POSITIVES OF EICHER MOTORS TO BECOME A MULTIBAGGER
- Facilities in Chennai including two modern manufacturing plants at Oragadam and Vallam Vadagal, and adjunct facilities at Thiruvottiyur
- Eicher Motors had highest-ever sales of Eicher trucks and buses, Volvo trucks, VE powertrains, Components, and Power Solutions.Company modern, connected, and efficient products, backed by our Uptime Promise, have been well received by customers looking to modernise logistics. As a result, Company have made remarkable market share gains across segments.
- FY 2023-24 was a game-changing year for Royal Enfield, with three spectacular motorcycle launches, a superb show of EV ambitions at EICMA, and an absolutely stunning edition of Motoverse that is soon becoming a community-first showcase for some of company new motorcycles.
- Eicher Motors registered best-ever performance with sales of 9,12,003 motorcycles, up 9% from the previous year, and maintained dominance in the middleweight segment
- Company launched the most celebrated and longest-running motorcycle model in the world, the Bullet 350 in an all-new avatar, followed by the launch of the all-new Himalayan on the new Sherpa 450 platform in November
- In January, company launched the Shotgun 650 – a very special motorcycle designed for – custom-by-custom
- Himalayan has been adjudged the Best Adventure Tourer and even won the most prestigious Indian Motorcycle of the Year 2024 (IMOTY); fourth IMOTY in the last six years.
- Eicher Motors Launched three spectacular Motorcycles, the highest- even in a single year, in line with ambition to be a global premium Motorcycling brand from India.
- Joint venture with Volvo Group for trucks and buses, Company achieved record-breaking sales during FY 2023-24. Eicher trucks and buses alongside Volvo trucks, saw remarkable success. Company registered highest-ever annual sales of 85,560 units, growing 7.5% over the 79,623 units sold last FY, and outpacing industry growth of about 4% in the relevant segments.
- Royal Enfield introduced the Wingman, a rider-centred connected vehicle system in India. It integrates vehicle connectivity via the Royal Enfield GRID team, offering proactive support and motorcycle information.
- Royal Enfield announced the introduction of Reown, a new company operated, pre-owned motorcycle business initiative to enable existing and prospective customers to buy or sell their Royal Enfield motorcycles, and exchange their motorcycles and upgrade to a Royal Enfield with ease.
What makes EICHER MOTORS To Become a Value Investing Company
- Eicher Motors is good value based on its Price-To-Earnings Ratio (31.4x) compared to the peer average (60.9x).
- Company has been growing earnings at an average annual rate of 21.4%, while the Auto industry saw earnings growing at 24.9% annually. Revenues have been growing at an average rate of 16.6% per year. company’s return on equity is 23.2%, and it has net margins of 23.6%.
- Current net profit margins (23.6%) are higher than last year (21.6%). Small Commercial Vehicle (SCV), showcased at Bharat Mobility Global Expo in January 2024, will mark a new growth segment for VECV in the large 2.5T – 3.5T last-mile category.
Profit & Loss
| Mar-21 | Mar-22 | Mar-23 | Mar-24 | CY | |
| Sales | 8,720 | 10,298 | 14,442 | 16,536 | 16,942 |
| Expenses | 6,937 | 8,120 | 10,996 | 12,206 | 12,471 |
| Operating Profit | 1,783 | 2,178 | 3,446 | 4,329 | 4,472 |
| OPM % | 20% | 21% | 24% | 26% | 26% |
| Other Income | 482 | 496 | 908 | 1,521 | 1,636 |
| Interest | 16 | 19 | 28 | 51 | 53 |
| Depreciation | 451 | 452 | 526 | 598 | 624 |
| Profit before tax | 1,798 | 2,203 | 3,800 | 5,202 | 5,431 |
| Tax % | 25% | 24% | 23% | 23% | |
| Net Profit | 1,347 | 1,677 | 2,914 | 4,001 | 4,184 |
| EPS in Rs | 49.28 | 61.32 | 106.55 | 146.13 | 152.8 |
| Dividend Payout % | 34% | 34% | 35% | 35% |
Negatives
- Eicher Motors manufacturing is concentrated in a single location – Chennai.
- Global risks associated with geopolitical crises and natural disasters which may cause operational disruption, shutdown or production cuts, project delays, supply chain hurdles, and increased construction costs.
- Dependence on single-source vendors or certain countries for key components/raw materials can lead to concentration risk.
- Reliance on ICE and outdated features along with sensitivity to changes in consumer sentiment and market segmentation can make the brand outdated
- With consumer preferences shifting towards electric mobility, unpreparedness to react or not having an appropriate product line to stay ahead of change can pose a risk.
- Sudden policy changes and stricter regulations on EVs, ICE vehicles, and environmental and legal regulations across operational markets can impact the business and sales.
Warren Buffett Checklist
| Type | Value |
| ECONOMIC MOAT | GOOD |
| GROWTH | GOOD |
| VALUATION | MODERATE |
| DEBT | GOOD |
| INTEGRITY | GOOD |
Summary
The company has the potential to become multibagger in the order of 300-500% in 5-10 year term.