Eicher Motors Ltd shares snapped a 7-day losing streak to gain nearly 2% on Thursday, on value-buying by traders. The stock was under pressure after the maker of the Royal Enfield motorcycles reported weak sales for the month of December.
At 12:40 pm, Eicher Motors shares were trading at Rs 20,235, up 1.7%, after hitting the day’s high of Rs 20,282. The stock had lost nearly 12.5% in the previous seven trading sessions before recovering on Thursday.
Brokerage firm Goldman Sachs on Thursday gave a ‘buy’ rating on the Eicher Motors stock with a target price of Rs 25,334, saying that the recent correction in the stock is a good opportunity to add to positions. Royal Enfield is better positioned to navigate the BS-VI transition owing to relatively lower price increases, among other factors, said Goldman Sachs.
Earlier in October, Nirmal Bang Equities had also given a ‘buy’ rating on the stock with a 12-month target price of Rs 21,127 per share.
“We expect 3.3% volume CAGR (compounded annual growth rate) for Royal Enfield over FY19-22. RE’s margin has been under pressure due to negative operating leverage, which we believe will continue for the rest of FY20 and gradually recover with volume growth,” the firm had said in a report.
Eicher Motors sold a total of 50,416 units in December, down 13% compared with 58,278 units sold in the year-ago period. All the segments saw a dip in sales during the month. Exports also declined 14% year-on-year to 1,927 units in December. The company also said that year-to-date sales declined 15% compared with a year ago.
For the quarter ended September, Eicher Motors had reported consolidated sales of Rs 2,171.54 crore, down 8% from the previous quarter and 9.3% from the year-ago quarter. The company had reported net profit after tax of Rs 564.39 crore during the period.