Margin, valuation worries may weigh on Eicher stock

Firm's ability to post more gains may depend on volume gains: Brokerages

- RAM PRASAD SAHU

The stock of automative major Eicher Motors hit its all-time high on Wednesday, capping the year with gains of about 52.7 per cent. It has comfortably outperformed its sector index, the Nifty Auto, which jumped 22.7 per cent, as well as the benchmark Nifty, which rose 10 per cent during this period.

While the September-quarter results were in line with expectations, its ability to post more gains going ahead will depend on volume gains amid concerns on the margin front and valuations.

The company continues to post strong volumes in its core segment of motorcycles with engine capacity over 250cc. The sector posted a 25 per cent growth in November and has gained 23 percent in this segment on a year-to-date basis. Royal Enfield (two wheeler brand of Eicher) has been driving the growth of this segment and has reported as al es growth of 25 percent year-to-date.