It was the five quarter year for Eicher Motors as they changed their financial year period from Jan – Dec to April – March from this financial year. Eicher Motors is one of the fastest growing automobile business in the country, reported its financial results last week. Here are the few notes we took from it.

  • Total income from operations was up by 80% (5 quarters) compare to last year and on yearly basis by 44%.
  • EBIDTA stood at Rs 2559.20 crore against Rs 1222.22 up by almost 109% (5 quarters) and on yearly basis by 68%.
  • Net profit came at Rs 1,277.88 crore against Rs 615.36 crore last year.
  • The board declared interim dividend of Rs 100 per share at the moment resulting into 21% as dividend payout ratio.

The numbers were rock solid and if we look at the quarter– on – quarter basis, the momentum looks intact.

  • Total income was up by 14% compare to last quarter
  • EBIDTA stood at Rs 668 crore compare to Rs 547.78 crore last quarter up by 22%
  • Net profits came at Rs 334.50 crore compare to Rs 270.80 crore last quarter, up by 24%

As per our calculations, its intrinsic value per share for the 2016 stood at Rs 10,212. The last time this business was trading at discount was in 2012, and since then its share prices had jumped up by 1176% giving compounded returns of 85.20%. For the same period the intrinsic values are climbing up by 39% every year on compounding basis.

We expect that share price will move at slower pace for the next two to three years and fall down to the pace of its growth in its intrinsic value. Eicher is trading at premium price today and there is no safety of margin available.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise you to take professional advice before going ahead with our views.