Eicher Motors stock surpasses ₹5,000 mark for the first time, up 32% in 6 months

In a significant milestone, Eicher Motors, a Nifty 50 index constituent, saw its shares cross the ₹5,000 mark for the first time today, hitting a new all-time high of ₹5,058.90, up by 3.2%. 

The shares have been on a steady bull run since February, recording a growth of 32%, outperforming the entire CY23 return of 28.4% in just six months.

Royal Enfield, the two-wheeler division of the company, launched its premium modern roadster, the Royal Enfield Guerrilla 450, on July 17. Known as the Royal Enfield GRR 450 in most Latin American markets, this model is powered by a 452cc single-cylinder liquid-cooled Sherpa engine.

The new model is based on the existing 450 Sherpa platform, which is present in the Himalayan 450 launched in November 2023. The Guerrilla 450 is priced similarly to the Triumph and Harley 400cc models.

In terms of performance, the Guerrilla 450's power output is comparable to the Triumph Speed 400 and higher than the Harley X440. Its key competitors in the premium segment include the RE Classic 350, RE Meteor 350, RE Himalayan 450, Honda H’ness CB350, Jawa Perak 335, Harley X440, and Bajaj Triumph 400.

Over the last five years, Royal Enfield has launched multiple models to expand its lineup, but the segment has struggled to increase its market share. Despite Royal Enfield's dominance in the premium bike market, its market share has decreased to 88.3% in FY24 from 96.3% in FY19.

The challenge to Royal Enfield's dominance in the premium motorcycle segment has come from Hero MotoCorp and Bajaj Auto, which have entered the premium category and received a positive response to their models.

Estimates indicate that Royal Enfield's competitors have averaged a monthly volume of approximately 11,194 units over the past 12 months. This increase has not only expanded the market size of the >250cc segment but also eroded Royal Enfield's market share.

Should you buy?

According to a recent note by domestic brokerage firm Elara Capital, Royal Enfield's retail market share remains largely stagnant at 4.2% in FY25 YTD, compared to 4.4% in FY23 and 4% in FY19, as per Vahan.

This stagnation can be attributed to several factors. Firstly, the brokerage notes that the high prices of the mid-size motorcycle segment are restricting demand. Secondly, it says the new model launches by Royal Enfield are largely cannibalising one another. Thirdly, the anticipated Royal Enfield to Royal Enfield replacement trend has not materialised as expected, it added.

Lastly, while no single competitor has made a significant impact, combined competition, garnering around 10,000 units per month, has limited Royal Enfield's potential for outperformance.

The brokerage does not expect these factors to change materially; it believes these launches are necessary to guard Royal Enfield's current market share and may not result in increasing it.

Therefore, the brokerage has reiterated its 'Sell' rating on the stock with a price target of ₹4,306 apiece, based on 24x June 2026E P/E for the Royal Enfield business and 11x June 2026E EV/EBITDA for VECV.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.