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Shares of Eicher Motors Ltd., which have soared almost 8,000 per cent in the past decade, have hit a sweet spot, says Goldman Sachs Group Inc.

The stock is down 16 per cent from its Sept. 8 record of 33,483.95 rupees even as the broad market posted a fresh record.

Eicher’s retreat has pushed down the valuation to below its five-year average and presents a buying opportunity, according to analyst Pramod Kumar. While the street took Eicher’s sequentially flattish third-quarter sales as signs of demand saturation for Royal Enfield -- a British wartime motorcycle brand -- the moderation was mainly due to plant rejig and model year change, Kumar wrote in a Jan. 18 note.

He added the stock to regional conviction list with a target price of Rs 35,208, implying a 26 per cent gain from Friday’s close, when it had a market value of about $12 billion dollars. Network expansion and new models will lead to Eicher’s revenue and operating profit compounding at 25 per cent and 30 per cent respectively, over the fiscal 2017-2020 period, according to the note.

Eicher Motors is the best-performing company on the NSE Nifty 50 Index over the past 10 years, and one of the gauge’s two members with a five-digit price tag on its shares.   

Last modified on Monday, 22 January 2018

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