Eicher Motors’ 20-year journey: Rs 1 lakh grows into Rs 3.5 crore with 35,000% returns

Eicher Motors shares have delivered a whopping 35,000% returns since its listing in 2004 and an investment of Rs 1,00,000 then would have turned into Rs 3.5 crore now. The Royal Enfield maker has been in top form for the past three months, outperforming its other auto peers. Analysts see more legs to the rally with a near-to-medium term target of Rs 7,800, reflecting a 13% upside.

The stock was listed on the NSE on September 7, 2004, and Ace Equity data shows the closing at Rs 19.89 on this date.

Eicher Motors’ past three-month returns stand at 29%, more than the industry returns of 18% in the same period and significantly outperforming benchmarks Nifty and BSE Sensex at 2.3% and 1.8%.

The stock is trading above its 50-day and 200-day simple moving averages (SMAs) of Rs 5,971 and Rs 5,412, respectively.

The next closest stocks are TVS Motor Company, Maruti Suzuki, Hero MotoCorp and BOSCH with returns of over 20%.

Source: Trendlyne

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Eicher Motors share price outlook

Decoding the charts, Anuj Gupta, Director at Ya Wealth Global Research said that the stock appears in a bullish trend, forming higher top & higher bottom amid significant volumes. He sees strong support at Rs 6,500 with resistance placed at Rs 7,200 levels. A breach above this level may lead to the targets of Rs 7,500-7800 levels, indicating a 13% upside.

He recommends a buy on dips strategy for the counter.

Nilesh Jain also sees a strong secular uptrend in Eicher Motor shares corroborating the formation of higher tops & higher bottoms. The Head Vice President, Equity Research Technical and Derivatives at Centrum Broking highlights stock currently trading at record highs in uncharted territory.

“While the overall structure remains bullish, the potential to reach 7,200+ levels is a given. The immediate support is seen around Rs 6,500,” Jain said.

He, however, sees the current levels as too high to make an entry, and said that the risk-to-reward ratio is not favourable for initiating fresh positions.

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Triggers

The mid-size bike maker with brands like Bullet, Hunter and Meteor has slashed prices on two-wheelers up to 350cc to pass on the benefits of Goods and Services Tax (GST) cut from 28% to 18% on motorcycles with engine capacity up to 350cc.

Royal Enfield on Tuesday (September 9) announced that it will pass the full benefit of the recent GST rate reduction to its customers across its motorcycle business, service, apparel, and accessories segments. The move comes in the wake of reforms introduced by the GST Council, aimed at making products more affordable.

The cut could see prices of its offerings go down by up to Rs 22,000. The GST implementation becomes effective from September 22, the day which will mark the beginning of festive season (Navratris) in India.

Eicher will also benefit from its commercial vehicle offerings because of the GST move, noted brokerage Axis Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)