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DailyBubble News

Multibagger blue-chip stock turns ₹1 lakh to ₹30 Cr in 23 years: Buy?


With a market worth of 1,02,575.98 Cr, Eicher Motors Ltd. is a blue-chip company that operates in the consumer discretionary goods and services (CDGS) industry. Being the flagship firm of the Eicher Group, Eicher, the parent company of Royal Enfield, is a major participant in the Indian automotive sector. Eicher and Sweden’s AB Volvo have a strategic partnership labelled Volvo Eicher Commercial Vehicles Limited (VECV). Eicher Motors is listed on the BSE and NSE, and the stock is benchmarked against the Nifty 50 Index since April 1, 2016. In a long-term investment of 23 years, Eicher Motors Ltd. is one of the multibagger stocks that has transformed investors from lakhpati to crorepati.

Share price history of Eicher Motors

The shares of Eicher Motors Ltd closed today at 3,750.05 apiece level, up by 1.85% from the previous close of 3,682.05. Compared to the 20-Day average volume of 928,626 shares, the stock had a total volume of 659,825 shares today. From 1.22 on January 1st, 1999, to the current market price, the stock price has gone up tremendously, logging a multibagger return and an all-time high of 307,281.15%. The investment return would thus be worth 30.73 Cr. now if an individual had invested 1 lakh in the stock 23 years ago.

The stock has appreciated 20.14% over the past five years and 31.26% over the past year. The stock has appreciated 37.93% YTD so far in 2022. On the NSE, the stock had touched a 52-week-high of 3,787.25 on (21-September-2022) and a 52-week-low of 2,159.55 on (08-March-2022), indicating that after hitting a fresh high yesterday, the stock was seen trading 0.98% below the high and 73.64% above the low at the today’s closing price. At today’s closing price the stock was seen trading above the 5 days, 10 days, 20 days, 50 days, 100 days and 200 days Exponential Moving Average (EMA) and Simple Moving Average (SMA).

Eicher Motors Limited RSI indicator value as of 22/09/2022 is 71.6 which shows that the scrip is in the overbought zone. For the quarter ended June 2022, the company recorded a promoter shareholding of 49.21%, FIIs holding of 29.50% (up 0.28% QoQ), DIIs holding of 10.13% (up by 0.18% QoQ), Government shareholding of 0.10% and public shareholding of 11.06% (down by 0.46% QoQ).

Should you buy the shares of Eicher Motors?

The research analysts Aditya Welekar and Shridhar Kallani of the broking firm Axis Securities said today in their research report that “Royal Enfield (RE) domestic sales contracted by 13% CAGR over FY19-22 led by multiple headwinds. Covid-led lockdowns and higher vehicle prices on account of commodity inflation, weak consumer sentiments, and supply-chain constraints led to lower sales. However, both demand and supply constraints are easing now and lowering commodity prices coupled with vehicle prices that are expected to remain stable would drive an uptick in sales moving forward. In order to gauge the market sentiments, we interacted with over 22+ dealers on a pan-India basis. Our channel checks suggests 20% higher enquiries and footfall in Sep’22 and strong customer response towards the newly launched Hunter 350.”

They further added that “RE’s wholesale sales number stood at 70,112 in Aug’22, up 53% YoY and 26% MoM, indicating an easing of production constraints. If the prevailing sales volumes sustain, RE will transition toward a volume growth phase. Against this backdrop, Sep’22 wholesale numbers will be key monitorable to ascertain whether production issues are over. With robust demand, expansive product portfolio, easing supply chains, expanding distribution network, and rapidly growing international sales, we model volume growth of 19% CAGR FY22-25E. The volume growth will drive higher operating leverage, which along with the correction in commodity prices, should lead to EBITDA margin expansion (+510bps over FY22-25).”

“We roll forward our valuation from Mar’24 to Sep’24 and upgrade our rating on the stock from HOLD to BUY with a revised TP of 4,125 ( 3,120 earlier). We value RE standalone business at 27x (from 24x earlier) on Sep’24 EPS ( 3,675) and VECV at 12x EV/EBITDA…



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