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Eicher Motors Ltd. posted a weak margin performance in Q3. Ebitda margin contracted by 31 basis points QoQ to 23% due to adverse product mix and price protection for customers for Hunter 350 in Q3. Price increase of Hunter (1.5%) and full benefit softening commodity prices will flow from Q4 and will help in expansion of Ebitda margin.
We expect the grand success of Hunter 350 will help in gaining market share in rural and urban space and will provide much needed boost to small studio outlets volume.
It will also help to accelerate the volume of export (will be used as an entry level bike for the global market).
We retain our positive view on Eicher Motors due to its leadership in the two-wheeler premium segment, strong product pipeline and network expansion.
Over the past few quarters, Eicher’s effort on new product launches, strengthening dealership network and margin recovery is impressive.
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