EICHERMOT - Investment Analysis: Buy Signal or Bull Trap?
Last Updated Time : 20 Dec 25, 07:05 am
Back to Investment ListInvestment Rating: 4.2
| Stock Code | EICHERMOT | Market Cap | 1,97,969 Cr. | Current Price | 7,217 ₹ | High / Low | 7,328 ₹ |
| Stock P/E | 42.2 | Book Value | 701 ₹ | Dividend Yield | 0.98 % | ROCE | 31.7 % |
| ROE | 25.1 % | Face Value | 1.00 ₹ | DMA 50 | 6,977 ₹ | DMA 200 | 6,201 ₹ |
| Chg in FII Hold | 1.16 % | Chg in DII Hold | -1.05 % | PAT Qtr | 1,208 Cr. | PAT Prev Qtr | 1,306 Cr. |
| RSI | 51.3 | MACD | 43.8 | Volume | 3,37,716 | Avg Vol 1Wk | 5,38,603 |
| Low price | 4,644 ₹ | High price | 7,328 ₹ | PEG Ratio | 1.08 | Debt to equity | 0.01 |
| 52w Index | 95.9 % | Qtr Profit Var | 19.6 % | EPS | 171 ₹ | Industry PE | 29.6 |
📊 Analysis: EICHERMOT demonstrates strong fundamentals with ROE at 25.1% and ROCE at 31.7%, both well above compounding thresholds. Debt-to-equity at 0.01 reflects a nearly debt-free balance sheet. EPS at 171 ₹ is robust, and PEG ratio at 1.08 suggests fair growth-adjusted valuation despite a relatively high P/E of 42.2 compared to industry average of 29.6. Dividend yield at 0.98% provides modest shareholder returns. Technicals show RSI at 51.3 (neutral), MACD positive (43.8), and price trading above both 50 DMA (6,977 ₹) and 200 DMA (6,201 ₹), indicating bullish momentum. Quarterly PAT dipped slightly (1,306 Cr. to 1,208 Cr.), but overall profit variance (+19.6%) remains healthy. The stock is near its 52-week high (7,328 ₹), suggesting limited immediate upside but strong long-term potential.
💡 Entry Zone: Ideal entry would be in the 6,600–6,900 ₹ range, closer to DMA support and valuation comfort. Current price (7,217 ₹) is near its peak, so waiting for minor corrections offers better risk-reward.
📈 Exit Strategy: If already holding, maintain positions for long-term (3–5 years) given strong ROE/ROCE and sector leadership. Consider partial profit booking near 7,300–7,400 ₹ resistance if valuations stretch further. Long-term holding is favorable due to consistent profitability, strong fundamentals, and sector resilience.
Positive
- 📌 Strong ROE (25.1%) and ROCE (31.7%) support compounding potential
- 📌 Debt-to-equity at 0.01 indicates robust balance sheet
- 📌 EPS at 171 ₹ reflects strong profitability
- 📌 PEG ratio at 1.08 highlights fair growth-adjusted valuation
Limitation
- ⚠️ Valuation premium: P/E 42.2 vs industry 29.6
- ⚠️ Dividend yield at 0.98% is modest
- ⚠️ Price near 52-week high (7,328 ₹) limits immediate upside
- ⚠️ Quarterly PAT dipped slightly (1,306 Cr. to 1,208 Cr.)
Company Negative News
- ❌ DII holding decreased (-1.05%)
- ❌ Slight decline in quarterly PAT
Company Positive News
- ✅ FII holding increased (+1.16%)
- ✅ Strong fundamentals with consistent profitability
Industry
- 🏦 Industry PE at 29.6, sector moderately valued
- 🏦 Automobile sector benefiting from premium motorcycle demand and export growth
Conclusion
🔎 EICHERMOT is a strong candidate for long-term investment with excellent ROE/ROCE, debt-free balance sheet, and consistent profitability. Entry near 6,600–6,900 ₹ offers margin of safety. Existing holders should maintain positions for 3–5 years, targeting partial exits near 7,300–7,400 ₹ if valuations stretch further. Long-term compounding potential remains favorable given sector leadership and strong fundamentals.
Would you like me to extend this into a peer benchmarking overlay comparing EICHERMOT against auto sector peers like Bajaj Auto, Hero MotoCorp, and TVS Motor to highlight relative valuation comfort zones?
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