Eicher Motors (EICHERMOT)

FairStock Score: 62/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Practically debt-free balance sheet: D/E of 0.02 and strong FCF of ₹1,519 Cr
• High return ratios: ROE 24.26%, ROCE 29.81%
• Robust growth: 5-yr revenue CAGR 16.69%; latest sales growth 26.19%, profit growth 20.63%
• Financial strength: Piotroski F-Score 8/9 and Altman Z-Score 21.46
• Promoter holding of 49.06% aligns minority interests

Concerns

• Extreme valuation: P/E 40.68, P/B 8.81, EV/EBITDA 47.80
• Negative margin of safety: Graham Number ₹1,881.19 and DCF ₹2,964.46 vs price ₹7,092.50
• PEG 3.71 suggests growth is not enough to justify the multiple
• Low dividend yield of 0.87% gives little downside support

AI Analysis

When I evaluate Eicher Motors, I first ask whether the business deserves my capital. The financial statements answer yes. Debt-to-equity is 0.02, so the company is practically debt-free. Return on equity is 24.26%, return on capital employed is 29.81%, and it generated ₹1,519 crore of free cash flow. The Piotroski score of 8 out of 9 and an Altman Z-score of 21.46 point to a financially sound enterprise. The latest quarter's ₹6,114 crore sales and ₹1,421 crore net profit show momentum, and the 5-year revenue CAGR of 16.69% confirms a durable growth franchise. Promoters own 49.06%, so their interests are aligned with minority shareholders. But Graham's most important lesson is that a wonderful business can be a bad investment at a wrong price. At ₹7,092.50, Eicher Motors carries a market capitalisation of ₹2.20 lakh crore. It trades at 40.68 times earnings, 8.81 times book value, and 47.80 times EBITDA. The Graham Number derived from book value and earnings is only ₹1,881.19, and even a DCF estimate of ₹2,964.46 stands far below the current price. The provided margin of safety is -325.82%. In other words, the market is not offering a discount; it is asking me to pay a rich premium for quality and growth. With a PEG ratio of 3.71, the price has outrun the growth rate. The dividend yield of just 0.87% provides little protection if sentiment changes. This is a steady compounder with a strong moat-like economics, but the valuation leaves no room for error. I would need a significantly lower price, or years of earnings catch-up, before this becomes a sensible purchase. For now, it belongs on the watchlist.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer