Eicher Motors shares jump 5% after UBS upgrade. Details here

Shares of Eicher Motors, the manufacturer of Royal Enfield motorcycles and other commercial vehicles, jumped 5 per cent in early trade on Wednesday. The jump in its share price came after brokerage firm UBS upgraded the stock to ‘buy’ from its earlier ‘neutral’ rating.

At around 11.00 am, shares of Eicher Motors were trading 5.04 per cent higher at Rs 3,905.50 apiece on the Bombay Stock Exchange (BSE).

It is worth noting that Eicher Motors shares have gained over 5 per cent in the past five trading sessions, over 14 per cent in six months and 32 per cent in a year.

UBS upgrades Eicher Motors

UBS also revised its price target for Eicher Motors to Rs 5,000 from Rs 4,300, indicating a potential upside of 34 per cent from Tuesday's closing levels. Furthermore, Eicher Motors was included in UBS' "APAC Key Call" list.

The upgrade by UBS stemmed from its assessment of Eicher Motors' risk-reward ratio as "compelling," particularly noting that Royal Enfield remains insulated from electrification risks.

UBS anticipates growth for Royal Enfield with the launch of its upcoming 450 cc platform to address competition and growth concerns.

According to UBS, Royal Enfield is poised to achieve a domestic volume growth at a Compounded Annual Growth Rate (CAGR) of 10 per cent between financial years 2024 to 2026, outpacing the industry growth projected between 6 per cent to 7 per cent.

UBS forecasts Eicher Motors' Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to grow at an 18 per cent CAGR.

The brokerage's optimistic outlook for Eicher Motors is also supported by strong domestic demand and favourable conditions for exports.