Shares of Eicher Motors fell as much as 3 percent to Rs 4,784 apiece in the morning on July 18 after a host of brokerages issued bearish calls on the stock following the company's launch of Royal Enfield Guerrilla 450.
Over the past couple of years, Eicher'' premium bike market share has come under pressure after competitors stepped up the ante with similar launches at cheaper or at par prices.
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Morgan Stanley maintains its 'underweight' call and has a price target of Rs 3,533.
Nomura has issued a 'reduce' call on Eicher Motors with a target price of Rs 4,119 per share. It said that the new Guerrilla 450 falls into the 400cc segment, which has not seen a significant increase in market share despite interesting new products. Nomura suggests this is because a large section of customers use bikes primarily for commuting, and these higher-end bikes are not only more expensive but also more challenging to ride in traffic due to their tendency to heat up. It does not expect the launch to improve Royal Enfield's overall growth significantly.
CLSA has issued an underperform call on Eicher Motors with a target price of Rs 4,157 per share. The international brokerage believes Royal Enfield is losing market share as competitors continue to scale up. CLSA also cites expensive valuations for its bearish recommendation. In the above 250cc segment, its market share is above 88 percent.
On the contrary, Citi has a 'buy' rating on the stock and has a price target of Rs 5,300. Analysts believe that the new launch will provide a solid upgrade to the current 350cc Royal Enfield owners. Citi says that the bike can also help the export segment, aiding the overall revenue and profitability.
Goldman Sachs, too, is bullish on the counter. With a 'buy' call and a price target of 5,400, the firm suggests that the new launch will help bolster Royal Enfield's upgrade ladder for 350cc users. The variants are priced cheaper than Hero MotoCorp's X440 and Eicher's Himalayan 450.
At about 11:20 am, shares of the company were trading at Rs 4,850 apiece, down 1.5 percent from the last close on the NSE. Eicher Motors' share price has risen nearly 12 percent in three months.
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