Eicher Motors share price rose in early trade today after brokerage UBS upgraded the stock to buy from sell. Eicher Motors share price rose 4.32% to Rs 20,066 against the previous close of Rs 19,236 on BSE. At 11:06 am, the stock was trading at Rs 19,975 level, higher by 738 points or 3.84% against previous close. On Nifty, the stock was the biggest gainer rising 4.07% to Rs 20,002 compared to the previuos close of Rs 19,220.
The large cap stock has risen 10.63% in last five sessions.
Eicher Motors share is trading higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. UBS upgraded the target price to Rs 23,000 and said de-rating and downgrade cycle for stock had come to an end.There is high conviction of sequential volume growth for Royal Enfield in H2 FY20, the brokerage said, adding that with limited price increases from BS-VI, its expects volume growth for Eicher Motors to turn positive in FY21.
Nirmal Bang Equities is also bullish on the stock. It has re-initiated the coverage on the stock with a 'buy' rating and has set a 12-month target price of Rs 21,127 per share. Eicher Motors is betting big on its well-known motorcycle brand Royal Enfield.Recently, Royal Enfield announced to set up low-cost studio stores to create touch-points in semi urban and rural regions and plans to open 450-500 such stores before 2019 Diwali festival.
Royal Enfield also plans to launch lower priced variants of Bullet and Classic 350.
"We believe that these steps will help RE to arrest FY20's decline and should help turn around sales in FY21-22. We expect 3.3 per cent volume CAGR for RE over FY19-22. RE's margin has been under pressure due to negative operating leverage, which we believe will continue for the rest of FY20 and gradually recover with volume growth," analysts at Nirmal Bang Equities said in report.
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