Emkay Reiterates ‘Buy’ on Eicher Motors, Keeps Rs 6,300 Target on Growth Visibility

Emkay Global Financial Services has reiterated its ‘Buy’ rating on Eicher Motors, keeping its target price steady at Rs 6,300. The brokerage remains upbeat on the stock, citing consistent core performance, promising product momentum at Royal Enfield, and a clear strategic focus on profitability and long-term growth.

The valuation is based on a 30x multiple of estimated FY27 core earnings, with Emkay projecting a 13% compound annual growth rate (CAGR) in earnings per share (EPS) over FY25–27.

"Eicher Motors continues to deliver on fundamentals, and we expect Royal Enfield to sustain its outperformance through targeted launches and expanding appeal among younger buyers," Emkay said in its latest report.

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Robust financials 

Eicher Motors reported a 23% year-on-year increase in consolidated revenue for the fourth quarter of FY25, reaching Rs 5,240 crore, marginally ahead of street estimates. Growth was driven by a healthy mix and a 1.5% sequential rise in average selling prices to Rs 1.85 lakh per unit. Consolidated EBITDA stood at Rs 1,260 crore, slightly below expectations, as margins came under pressure from one-time charges—including an inventory provision on older models and liquidation costs associated with a European dealership. When adjusted for these, margins were largely in line.

Bottom-line performance remained strong, with net profit rising 27% YoY to Rs 1,360 crore, supported by higher other income and improved profitability at VE Commercial Vehicles (VECV), which reported a 14% rise in revenue and 150 basis points margin expansion, according to the company. 

Key USPs

A key driver of Emkay’s positive outlook is Royal Enfield’s growing traction among younger consumers. The company’s Hunter 350 has helped lower the average age of its customer base to 24–26 years, from 38–40 years for older models like the Classic. Notably, more than 30% of Royal Enfield buyers are now under 25, with financing penetration rising to 61%.

Royal Enfield plans to build on this momentum with a steady stream of refreshes and new launches in FY26, while also capitalizing on rising demand in export markets. The brand now ranks among the top four players in several key international geographies, with retail volumes holding steady despite soft global demand trends.

Capital Discipline 

Eicher has outlined a Rs 1,200–1,300 crore capital expenditure plan for FY26, primarily directed towards expanding its electric vehicle capacity and supporting product development. The company remains focused on driving absolute profit growth, rather than aggressively defending margins—an approach reflected in its modest price hikes and value engineering initiatives.

Despite near-term cost pressures from raw material volatility and regulatory compliance, Emkay sees these as manageable and believes operating leverage will aid margin recovery, much like the post-Hunter launch trajectory.