Eicher’s Motors Growth, Margins Struggle
- 11th February 2025
Aaj Ka Bazaar
Indian markets are expected to have a subdued start, with the GIFT Nifty remaining flat, which suggests a steady opening for Dalal Street. On Monday, Wall Street closed higher, driven by significant gains in Nvidia and AI-related stocks, while steelmakers saw a surge after Donald Trump proposed additional tariffs on steel and aluminium imports. In Asia, sentiment was mixed: Australia and South Korea reported slight gains, whereas Japan remained closed, resulting in muted movements in US Treasury yields in the region. Considering these factors, technology and AI-driven stocks are likely to continue attracting interest, while metal stocks could experience some volatility due to concerns over global trade tensions. Overall, the market is expected to trade with a cautiously positive bias, keeping an eye on sector-specific trends and global developments.
Markets Around Us
BSE Sensex –77,977.28 (-0.10%)
Nifty 50 – 23,306.75 (-0.32%)
Bank Nifty – 49,725.15 (-0.51%)
Dow Jones – 44,431.11 (-0.10%)
Nasdaq – 19,709.19 (0.95%)
FTSE – 8,767.80 (0.77%)
Nikkei 225 – 38,801.17 (0.00%)
Hang Seng – 21,367.69 (-0.72%)
Sector: Automobiles
Eicher Motors Ltd. Q3FY25
Despite Eicher achieving double-digit growth across its financial metrics, the results fell short of market expectations. Revenue growth was primarily driven by increased RE and VECV volumes. However, profitability suffered due to higher promotional costs, which offset the positive effects of improved exports, resulting in lower margins. Looking ahead, we maintain a positive outlook for the company, anticipating continued revenue momentum, though margins are likely to be pressured by persistent marketing expenses. With the introduction of new models such as the Bear 650, Guerilla 450, 2024 Classic 350, Goan Classic 350, and Shotgun 650, the company strengthens its position in the midsize motorcycle segment. Additionally, the opening of a new assembly plant in Thailand and plans to establish a new CKD unit in Brazil will boost its international presence. Furthermore, the company’s entry into the EV market with its new brand “Flying Flea” expands its reach. Overall, despite short-term challenges from increased promotional expenses.
Why it Matters:
Eicher’s strategic initiatives and strong product lineup position it well for sustained growth and expansion in both domestic and international markets. Key factors to watch will be the management’s commentary on new launches, cost management plans, and updates on the CKD unit in Brazil.
NIFTY 50 GAINERS
ADNIENT – 2350.70 (2.61%)
GRASIM – 2516.20 (1.74%)
HINDALCO – 602.75 (1.13%)
NIFTY 50 LOSERS
EICHERMOT – 5089.95 (-4.60%)
APOLLOHOSP – 6468.10 (-4.34%)
POWERGRID – 263.00 (-2.12%)
Secto: Railways
RVNL Secures ₹335cr Deal, Shares Dip
RVNL’s stock fell nearly 2% in early trading on February 11, despite winning a ₹355.43 crore project from South Western Railway. At 9:22 AM, its share price was ₹375.10, down 1.63% on the BSE. The project involves designing, supplying, installing, testing, and commissioning KAVACH equipment over 790 RKM in the Hubballi and Mysuru Divisions, with completion expected in 18 months. This follows RVNL’s ₹210.78 crore project win on February 7 for upgrading the electric traction system in the Kharagpur-Tatanagar section and a ₹404.40 crore contract secured on February 4 from East Coast Railway. The company’s board will meet on February 12 to review its Q3 and nine-month financial results. Despite strong order inflows, the stock decline suggests investor caution, possibly due to execution risks or broader market trends. Traders and investors will closely watch financial results and future contracts for growth outlook and stock movement.
Why it Matters:
RVNL’s stock decline despite securing large projects suggests concerns over execution challenges, profitability, or broader market trends. Investors might be cautious about the company’s ability to deliver within deadlines or profit margins on these contracts. Additionally, upcoming financial results on February 12 could impact sentiment.
Around the World
Asian stock markets fell on Tuesday as renewed U.S. tariffs under President Trump, particularly on aluminum and steel, increased global trade tensions and led to a risk-off sentiment. Investors shifted towards safe-haven assets like gold and bonds, fearing economic disruptions. China’s Shanghai Composite and CSI 300 fell 0.5% and 0.7%, respectively, while Hong Kong’s Hang Seng dropped 0.7% after a recent tech-driven rally. Other markets like the Philippines (-1%) and Indonesia (-0.6%) also declined, while South Korea’s KOSPI bucked the trend, rising 0.5%. U.S. stock futures also traded lower ahead of key inflation data due Wednesday, which could influence the Federal Reserve’s interest rate outlook. Meanwhile, Australia’s ASX 200 was flat as consumer sentiment remained weak despite expectations of an interest rate cut. The Reserve Bank of Australia is expected to lower rates in its February 17–18 meeting, given easing inflation, according to Westpac economists.
Option Traders Corner
Max Pain
Nifty 50 – 23,500
Bank Nifty – 50,200
Nifty 50 – 23,422 (Pivot)
Support – 23,275, 23,169, 23,023
Resistance – 23,528, 23,674, 23,780
Bank Nifty – 49,946 (Pivot)
Support – 49,737, 49,494, 49,284
Resistance – 50,190, 50,399, 50,642
Have you checked our latest YouTube Video
Did you know?
India's Mutual Fund Industry Sees 40% Growth
The total equity assets under management of India’s domestic mutual fund industry reached ₹33.4 trillion in 2024, marking a 40% increase compared to the previous year, according to Motilal Oswal’s Fund Folio Report.
