Global brokerage Morgan Stanley on Tuesday downgraded the Eicher Motors stock to 'Underweight' from 'Equal-weight' earlier, citing market share and margin challenges, and high valuations. The brokerage has also trimmed its target price to ₹3,209 from ₹3,552 per share, implying a further downside of 17% from Monday's closing levels.
Highlighting a couple of reasons behind the downgrade, analysts at Morgan Stanley expect growth and market share challenges, limited margin upside and high valuations.
Eicher's Royal Enfield is facing rising competitive pressures in the market. Not Just Bajaj Auto or Harley Davidson, Hero Motocorp's recent entry in the 440cc segment with the newly-launched Maverick will also pose challenges.
Eicher Motors has recently been served demand notices of over ₹130 crore from three different authorities over issues related to GST. The company has received a demand order for an aggregate amount of ₹129.79 crore, including a penalty of ₹11.8 crore and applicable interest from the office of the Principal Commissioner of CGST and Central Excise, Chennai, Eicher Motors said.
The officer has disallowed certain GST credit and raised GST demand, largely on account of the difference in GST credit mismatch between the company's GST availment and details reported by suppliers in their GST returns.
Eicher Motors has an average stock target price of ₹3,947, according to data from Trendlyne. The consensus estimate represents an upside of 3.74% from the last price of ₹3,804.80.
Shares of Eicher Motors are trading 0.58% lower at ₹3,809.75 and are still 9% below its 52-week high price of ₹4,201.7, hit on December 4, 2023. The stock has rallied over 21% in the last one year but has fallen nearly 6% so far in 2024.
First Published: Jan 16, 2024 10:52 AM IST
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