Eicher Motors sinks 3% as CFO Arunachalam tenders resignation
Shares of Eicher Motors dropped 3.3 per cent to the day’s low of Rs 3,366 on Friday after the company’s chief financial officer (CFO) Kaleeswaran Arunachalam tendered his resignation, which will be effective after September 2.
Eicher Motors said the appointment of a new CFO in his place would be intimated in due course. Meanwhile, Arunachalam will now join Cromptom Greaves Consumer as CFO, from September 5.
Arunachalam’s resignation from the autombile major follows a series of management exits from the company over the last few years.
As per reports, after Royal Enfield’s (co’s motorbike arm) former Chief Executive Officer Vinod Dasari parted ways in August, 2021, a number of senior officals have left the bullet motorcycle maker.
Its Asia-Pacific head, Vimal Sumbly, was reportedly the latest official to have exited in February this year.
Eicher Motors, however, has maintained a bullish upcycle on the bourses. The company’s scrip has jumped 33 per cent in the last six months on new launches and robust demand.
Post this rally, global brokerage UBS sees limited upside potential. It has lowered its rating to ‘Neutral’ with a revised price target of Rs 3,675. “While the Hunter 350 launch should address domestic demand concerns in the near term, a sustainable recovery in Royal Enfield (RE) volumes will have to wait for material macro improvement,” it said.
It adds that its estimated FY24 domestic volumes of 790,000 units (150,000 of Hunter) are still lower than the FY19 peak of 805,000 units, underscoring the demand fatigue facing the category.
Divulging from this view, HDFC Securities on the other hand, believes Royal Enfield to be a key beneficiary of the premiumisation trend in India given its dominant position in the >250cc market. It targets to launch multiple new products over the next 18-24 months, which would provide an upgrade option to its existing customers.
“On exports, the bike maker is seeing a strong demand pull from its key markets. Management expects to see sustained growth in the coming years,” the brokerage said in a recent report, reiterating its ‘Add’ rating on Eicher Motors.
Moreover, to factor in the improved demand momentum from Hunter, the brokerage has raised its FY23-24 estimates by 3 per cent each. On account of the earnings revision and a roll forward to June 2024 earnings, its target price has been revised upwards to Rs 3,333 per share.