Homemarket Newsstocks News

    Robust returns! This stock turned 10,000 to Rs 3.5 lakh in 10 years. Do you own it?

    Robust returns! This stock turned 10,000 to Rs 3.5 lakh in 10 years. Do you own it?

    Robust returns! This stock turned 10,000 to Rs 3.5 lakh in 10 years. Do you own it?
    Profile image

    By Pranati Deva   IST (Updated)

    Mini

    The stock which stood around Rs 620 in 2009 has risen as much as 3,476 percent to Rs 22,176 in 2019.

    Eicher Motors has been a strong long-term performer giving robust return and steadily rising in the last 10 years. The stock which stood around Rs 620 in 2009 has risen as much as 3,476 percent to Rs 22,176 in 2019.
    An investment of Rs 10,000 in this stock in 2009 would now be over Rs 3.5 lakh currently. However, recently, the company has been witnessing a fall in demand due to the slowdown in the auto sector which has lasted for over a year now.
    During the last one year, the stock has lost 5.5 percent and fallen over 5 percent since the beginning of this year. In comparison, benchmark Nifty rose 15 percent during the last one year and has gained nearly 13 percent since the beginning of this year.
    The stock fell to its fresh 52-week low of Rs 15,196 on August 26, 2018. However, the sinking stock got a push after Finance Minister Nirmala Sitharaman announced cut in the corporate tax rate to 22 percent from 30 percent on September 20. Since then, the large-cap stock surged 40 percent in nearly 3.5 months.
    Peer comparison
    The stock has outperformed its peers in terms of returns during the last ten years. Among other stocks, TVS Motor Company rallied 1,450 percent, while Bajaj Auto was up 279 percent in this period.M&M added 99 percent, while Hero Moto Corp and Tata Motors gained 40 percent and 14 percent, respectively in the last 10 years.
    Earnings
    The company reported a 21% fall in its Q1 profit to Rs 451.8 crore on subdued demand and low volume. However, the performance improved in Q2, with the company posting a 4.36 percent increase in its consolidated net profit at Rs 572.69 crore.
    However, total revenue from operations, however, declined to Rs 2,192.47 crore for the second quarter as compared with Rs 2,408.17 crore in the same period of the previous fiscal, Eicher Motors said in a regulatory filing.
    During the period of 10 years, the firm has risen steadily. In FY19, the firm logged Rs 9,794.06 crore in income from operations compared to Rs 4421.26 crore in 2010. Net profit also rose nearly six times during the period to Rs 1,961.85 crore from Rs 306.85 crore.
    Brokerage
    However, analysts are cautious on the stock due to the ongoing slump. Kotak Institutional Equities in a report said that it has a 'sell' rating on the stock with a target at Rs 17,000 per share. Its bull case target is of Rs 26,000 implying Royal Enfield's market share in premium bikes reaches 50 percent by FY32. In its base-case scenario, the target is Rs 16,300 implying Royal Enfield's market share rising 30 percent by FY32.
    Morgan Stanley also believes that the share price will fall relative to index over the next 30 days. It added that lower-priced variants, the competition will put pressure on the margin that Royal Enfield enjoys. It further sadi that the recent rally in stock price also makes valuations less attractive.
    Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions
    arrow down

      Market Movers

      View All
      CompanyPriceChng%Chng