Eicher Motors accelerates as holding firm to buyback at huge premium

Eicher Motors jumped 20% to Rs 384.30 at 13:49 IST on BSE after its holding company Eicher Goodearth Investments said it plans to buy back 13.12% of the public holding in Eicher Motors at Rs 691.68 per share

The stock hit a high of Rs 384.30 and a low of Rs 318.05 so far during the day. The stock had a 52-week high of Rs 599 on 10 December 2007 and a 52-week low of Rs 230.10 on 24 March 2008.

The mid-cap commercial vehicle maker has an equity capital of Rs 28.09 crore. Face value per share is Rs 10.

The current price of Rs 384.30 discounts its Q4 March 2008 annualised EPS of Rs 27.71, by a PE multiple of 13.86.

The proposed buy back offer is at hefty premium of 79.98% over the current price of Rs 384.30. Eicher Goodearth Investments holds 58.20% stake in the company while public holding in Eicher Motors stood at 15.57% (as at end March 2008).

Meanwhile, the world's number two truck maker Volvo said on Monday, 26 May 2008, it had inked a final agreement to set up a new truck and bus joint venture with Eicher Motors. In line with the preliminary deal unveiled late last year, Volvo will own 45.6% of the joint venture company, called VE Commercial Vehicles, and buy an 8.1% stake of Eicher Motors, leaving it with a direct and indirect ownership in the joint venture of 50%.

Earlier on 16 May 2008, the Foreign Investment Promotion Board (FIPB) had cleared a proposal by AB Volvo to pick up 8.1% stake in Eicher Motors for $30 million.

Eicher Motors’ commercial vehicle sales increased 17% to 2,002 units in April 2008 over April 2007.

Eicher Motors reported 6.8% fall in net profit to Rs 19.46 crore on 5.5% rise in net sales to Rs 653.35 crore in Q4 March 2008 over Q4 March 2007.

Eicher Motors manufactures and sells commercial vehicles, tractors, two-wheelers and gears. Its plants are located at Madhya Pradesh, Tamil Nadu and Maharashtra.