EICHERMOT - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.4
| Stock Code | EICHERMOT | Market Cap | 1,98,976 Cr. | Current Price | 7,252 ₹ | High / Low | 7,614 ₹ |
| Stock P/E | 42.4 | Book Value | 701 ₹ | Dividend Yield | 0.96 % | ROCE | 31.7 % |
| ROE | 25.1 % | Face Value | 1.00 ₹ | DMA 50 | 7,159 ₹ | DMA 200 | 6,490 ₹ |
| Chg in FII Hold | 0.03 % | Chg in DII Hold | 0.02 % | PAT Qtr | 1,208 Cr. | PAT Prev Qtr | 1,306 Cr. |
| RSI | 53.8 | MACD | -42.7 | Volume | 2,63,488 | Avg Vol 1Wk | 4,78,915 |
| Low price | 4,644 ₹ | High price | 7,614 ₹ | PEG Ratio | 1.08 | Debt to equity | 0.01 |
| 52w Index | 87.8 % | Qtr Profit Var | 19.6 % | EPS | 171 ₹ | Industry PE | 30.0 |
📊 Analysis: EICHERMOT (Eicher Motors) shows strong fundamentals for long-term investment. ROCE (31.7%) and ROE (25.1%) highlight excellent capital efficiency and profitability. EPS of 171 ₹ is robust, and debt-to-equity at 0.01 reflects a virtually debt-free balance sheet. The P/E ratio (42.4) is above the industry average (30.0), indicating premium valuation, but PEG ratio of 1.08 suggests growth is reasonably priced. Dividend yield of 0.96% adds shareholder value. Technically, the stock is trading above DMA 50 and 200, with RSI at 53.8 (neutral zone) and MACD negative, suggesting consolidation before further upside.
💰 Ideal Entry Zone: 6,800 ₹ – 7,050 ₹ (near DMA 50 support and below current price, offering margin of safety).
📈 Exit / Holding Strategy: For long-term investors, holding is recommended given strong ROE, ROCE, and consistent earnings growth. If already holding, maintain positions with a 3–5 year horizon. Exit strategy: consider partial profit booking near 7,600–7,700 ₹ (52-week high zone) if valuations stretch, but retain core holdings for compounding growth.
Positive
- Strong ROCE (31.7%) and ROE (25.1%) indicate efficient capital deployment.
- EPS of 171 ₹ reflects consistent profitability.
- Debt-to-equity ratio of 0.01 shows virtually debt-free operations.
- Dividend yield of 0.96% provides shareholder returns.
Limitation
- P/E ratio (42.4) is higher than industry average (30.0), indicating premium valuation.
- Quarterly PAT declined (1,208 Cr. vs 1,306 Cr.), showing short-term pressure.
- Trading volume below 1-week average, suggesting reduced momentum.
Company Negative News
- Sequential decline in quarterly profit (-7.5%).
- MACD negative, indicating short-term weakness in trend.
Company Positive News
- Quarterly profit variation +19.6% YoY, showing strong annual growth.
- FII and DII holdings increased slightly, reflecting institutional confidence.
Industry
- Industry PE at 30.0, lower than company’s valuation, highlighting premium positioning.
- Automobile sector benefits from rising demand for premium motorcycles and exports.
Conclusion
✅ EICHERMOT is a strong candidate for long-term investment, supported by excellent ROE, ROCE, low debt, and consistent earnings. Ideal entry zone is 6,800–7,050 ₹ for margin of safety. Investors should hold for 3–5 years to benefit from compounding growth, with partial exits near 7,600–7,700 ₹ if valuations peak.
Selva, would you like me to extend this into a peer benchmarking overlay with Bajaj Auto, Hero MotoCorp, and TVS Motor? That would give you a sector rotation view and margin-of-safety comparison for your basket logic.