Should investors buy, sell or hold Eicher Motors after Q1 results? Here’s what brokerages say

Its consolidated EBITDA came in at Rs 362.9 crore, as against Rs 4 crore in the year-ago period.

In late afternoon deals, the Eicher Motors stock traded 2.28 percent lower at Rs 2,555.70 apiece on BSE, underperforming the headline Sensex index, which was up 1.03 percent, near an all-time high registered earlier in the day.

The brokerage said the company's gross profit per unit rose 9 percent QoQ, which is the highest among original equipment makers, reflecting better pricing power. The CEO's departure and the company's limited visibility on production in the near term will be an overhang for Eicher Motors, said Morgan Stanley, which has retained an 'overweight' rating on the stock with a target price of Rs 3,145.

The brokerage said the company's Q1 performance was in line with estimates, but the resignation of Royal Enfield's CEO was sudden. It expects the medium-term growth for Royal Enfield in the domestic market to be in line with the overall market. UBS has retained a 'neutral' rating on the stock with a target price of Rs 2,800.

The brokerage has a 'reduce' call on the stock with a target price of Rs 2,300. The timing of the decision by industry veteran Vinod K Dasari to move on from Royal Enfield has surprised as the original equipment maker is in the middle of rolling out its new models ad and is contending with supply chain issues, the brokerage said. Though B Govindarajan, who is appointed as the new CEO to take over from Dasari, is an insider at Royal Enfield, he will have to contend with the near-term challenges of production constraints/potential launch

delays, it added.

The brokerage expects a swift recovery in the company's volume from the second half of FY22, but adds that Eicher Motors' valuation remains expensive. The company's standalone EBITDA was 14 percent above estimates, said Kotak Institutional Equities, which has maintained a 'sell' call on the stock with a target price of Rs 2,340.