be value accretive.
Upgrade to Buy: What has changed? Contrary to our expectations of overall growth being restricted by cyclical downturn in commercial vehicles, we note the following: Motorcycle demand continues to stay ahead of supply; commercial vehicles performing better than the competition with higher profitability despite worse than anticipated demand slowdown; engine business has wider scope and is likely to be more profitable than estimated earlier.
Raising forecasts: We raise Eicher Motors’ EPS forecasts by 25% in CY14e and 46% in CY15e. Much of this is driven by the motorcycle business, both on revised volume and margin assumptions, and to a limited extent on VECV’s engine business. We largely retain forecasts for the CV business, with lower volumes offsetting increased assumptions on margins.