Eicher Motors and UPL Limited: Weekly Recommendations

The two stocks recommended by SMC Global Securities’ Research Team this week are Eicher Motors and UPL. These two stocks have shown great potential with positive financial estimates for the next two financial years. So, let’s go through the details of the two stock recommendations for the period between March 10, 2025 and March 14, 2025.

Eicher Motors Limited

Eicher Motors share price is ₹5,130 (as on March 7, 2025) and its target price is set at ₹5,978 with an upside potential of 17%.

Eicher Motors Limited: Investment Rationale

• Eicher Motors is the listed parent of Royal Enfield, the global leader in middleweight motorcycles. In addition to motorcycles, Eicher has a joint venture with Sweden’s AB Volvo – Volvo Eicher Commercial Vehicles, which operates in India’s commercial vehicle space.
• In Q3 FY2025, Royal Enfield’s sales volumes stood at 269,039 motorcycles, up 17% from 229,214 motorcycles sold during Q3 FY2024. Further, the company’s monthly motorcycle sales in Feb 25 stood at 90,670 units, which is higher by 19% as compared with 75,935 units in the same month a year ago.

• The international business recorded 9,871 units sold in February 2025, marking a 23% increase over the 8,013 units sold in the same month of the previous year.
• Its “Royal Enfield” has further solidified its position in the mid-size motorcycle segment, achieving its best-ever quarter, fueled by strong global demand for its bikes. To enhance its international footprint, the company has established its first wholly-owned CKD facility outside of India, located in Thailand. This investment underscores Royal Enfield’s dedication to expanding its presence in the Asia-Pacific region.
• Moving forward, the company remains committed to delivering outstanding motorcycles and creating memorable experiences for motorcycle enthusiasts worldwide.
• In Q3 FY25, the company launched two major models: the Goan Classic and Scram 440, both emphasizing authenticity and purpose-built design. Additionally, it introduced its electric mobility brand, Flying Flea, marking its entry into the EV segment. The initial production capacity for Flying Flea is set at 1.5 lakh units per annum, with the potential for scalability based on market demand.
• The company is also collaborating with Stark to advance light weighting and electric vehicle technology. Looking ahead, the management plans to expand its retail presence in new markets, including Bangladesh, with potential future expansions in Brazil.
• Its joint venture, VECV, achieved its highest-ever quarterly sales at 21,012 units in Q3FY2025, registering a growth of 1.48% as compared with 20,706 units sold in Q3 FY24. The company secured a significant 36% market share in the LMD truck segment.
• Additionally, bus segment sales surged, with 3,749 units sold, reflecting a 10% year-on-year increase. Domestic sales in February 2025 grew by 6.2%, totaling 7,357 units, while total exports surged by 74.7%, reaching 552 units compared to February 2024.

Eicher Motors Limited: Shareholding Pattern

The promoters’ shareholding is highest in Eicher Motors at 49.09%.

Eicher Motors Limited: Valuation

The company has delivered exceptional operational and financial results, surpassing the previous quarter’s performance. It achieved its best-ever festive season, launched exciting new motorcycles, and made its first move into electric mobility with the introduction of its EV brand, Flying Flea.

With a strong and diverse product lineup, the company is well-positioned to meet the evolving demands of riders worldwide. Despite a sluggish commercial vehicle market, VE Commercial Vehicles saw quarter-on-quarter growth and gained market share across all segments. With this strong momentum in both the motorcycle and commercial vehicle sectors, the company’s management is confident in its continued success moving forward.

Thus, it is expected that the stock may see a price target of ₹5,978 in 8 to 10 months’ time frame on three year’s average P/Bv of 6.79x and FY26 BVPS of ₹880.47.

Eicher Motors Limited: Risk

• Regulatory Risk
• Technological Changes Risk

UPL Limited

UPL share price is ₹630.45 (as on March 7, 2025) and its target price is set at ₹740 with an upside potential of 17%.

UPL Limited: Investment Rationale

• UPL is principally engaged in the agrobusiness of production and sale of agrochemicals, field crops, and vegetable seeds, and the non-agrobusiness of production and sale of industrial chemicals, chemical intermediates, and specialty chemicals.
• Recently, Advanta Enterprises, a subsidiary of UPL, secured a significant $350 million investment from Alpha Wave Global, a leading global investment firm. As part of the deal, Alpha Wave Global will acquire a 12.5% stake in Advanta through both primary and secondary investments.

• The primary investment of $100 million will be allocated to support Advanta’s growth initiatives, while the secondary sale of $250 million will enable UPL to reduce its debt. Additionally, UPL has raised ₹3,377.74 crores through a rights issue, offering 9.38 crore shares to its shareholders. The rights issue allowed shareholders to purchase one new share for every eight existing shares at a price of ₹360 per share.
• During Q3 FY25, Revenue from operations rose 10% YoY to ₹10,907 crores in the quarter ended 31 December 2024, driven by a 9% increase in volumes, a 5% increase in price, and a 4% decline due to FX, mainly in Brazil.
• EBITDA stood at ₹2,163 crores in the December 2024 quarter, more than three times of EBITDA ₹416 crores posted in Q3 FY24. EBITDA margin zoomed 1,560 bps YoY to 19.8% during the period under review driven by an improved product mix, rebate normalization, and COGS improvement.
• In December 2024, working capital decreased by ₹6,000 crores to ₹13,280 crores, driven by improved inventory and credit management. Gross debt reduced by US$815 million to US$3.53 billion. Net debt also fell by US$745 million, with cash balances at US$511 million, aiming for $300-$400 million free cash flow.
• The company’s management reports strong fundamentals in the global crop protection market and farmgate demand across most regions. Leading the growth is the fungicide segment, driven by mancozeb products worldwide and premium fungicides in Europe.
• Additionally, the BioSolutions NPP business saw a 10% growth, with biocontrol products in Latin America and Europe experiencing strong customer demand. UPL’s revenue from Europe rose by 28% YoY. Income from India climbed 28% YoY, followed by North America, up 59% YoY, and Latin America jumped 12% YoY during the period under review.

UPL Limited: Shareholding Pattern

In the overall shareholding of UPL, promoters have the highest shareholding at 33.5%.

UPL Limited: Valuation

The company is experiencing a strong recovery compared to last year, with business normalization, improved volumes, and rising prices. This has helped restore contribution margins to previous higher levels.

The management’s focused efforts have successfully reduced working capital, leading to a significant decrease in net debt since September 2024. With this solid performance, the company is confident in meeting its full-year EBITDA and free cash flow guidance.

Thus, it is expected that the stock may see a price target of ₹740 in 8 to 10 months’ time frame on current P/BV of 1.76x and FY26 BVPS of ₹420.47.

UPL Limited: Risk

• Supply chain issue
• Economic slowdown

Conclusion

These two stocks Eicher Motors and UPL Limited, one from the automobile sector and the other from the agrochemical sector can reach their target price in the coming 8 to 10 months. However, it is always better if you do your analysis before investing and set a stop-loss target. To keep track of your invested stocks, open demat account with SMC Global Securities and invest on the go.

Reference:
https://www.smctradeonline.com/research/wise-money/241

Author: All Content is verified by SMC Global Securities.