Eicher Motors, one of the leading players in automobile industry, announced that Royal Enfield's (RE) Q4FY21 consolidated revenue was broadly in-line with our and consensus estimates whereas EBITDA was below our and consensus estimates on account of higher Raw material cost and other operating expenses. The falling covid cases and pickup in vaccination drive will help in normalizing the economic activity.

Commenting on the result review, IDBI Capital said, "We expect domestic 2W industry to see a double-digit growth for FY22/FY23 on a low base. We build our volume growth estimates for FY22/FY23 to +18%/+15% factoring the strong recovery in 2W domestic market.

We expect revenue/EBITDA/ earnings to grow at 14%/16%/17% respectively CAGR over FY20-FY23E with EBITDA margin of ~24.9% on account of rise in realization, strong traction from new product launches, healthy order book and higher exports.

We value RE biz at 25x and 15x for VECV business. Due to recent fall in share price we change our rating to HOLD (earlier REDUCE) with TP of Rs 2,630 (earlier Rs 2,650)."

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