The other trigger is the launch of motorcycles based on new platforms in the light-weight and higher displacement categories over subsequent quarters. Analysts at Emkay Research believe it will help widen the addressable customer base in both domestic and overseas markets.
While these factors are positive for the company, analysts say investors should adopt a cautious approach in the current environment. The first is the likely impact of customers putting off discretionary spends post the Covid-19 outbreak which will dent Eicher’s volumes, given the higher unit prices.
Even in export markets, HDFC Securities believes that competition will increase over the medium term.
Aditya Makharia and Mansi Lall of the brokerage says that Harley Davidson
have announced partnerships to make 200-750 cc motorcycles. Makharia expects the mid-size lifecycle biking segment to become more competitive and it can be a hurdle for Eicher’s export ambitions.
The competitors include Harley Davidson
(Chinese joint venture), Triumph
(Bajaj Auto), and M&M-backed Jawa Motorcycles.
The rising exports, which currently account for 6 per cent of volumes, were a key trigger for the stock, given the medium-term expectations of volumes reaching up to a fifth of the overall sales. Investors may have to moderate expectations on this count.