Eicher Motors' Stock Price Surge: Is It Worth Buying in 2020?
Over the last 2 to 2.5 months, the stockprice of Eicher Motors has experienced a remarkable surge, gaining almost 50%. Starting from approximately 15,000 levels in August, it climbed to its current value of around 23,000 levels. This represents a very sharp rise in a relatively short period.
Current Valuation and Discount
Despite this impressive gain, the stock still carries a significant discount compared to its peak levels, which were around 32,000. Currently, it is only around 30% below its peak, indicating that there is still considerable upside potential.
Brokerage House Upgrades
Recently, several brokerage houses have provided strong upgrades on the stock, with many raising the target price to around 23,000 Rs (Rupees) as of early October. These upgrades reflect the optimistic outlook on the company's future prospects, particularly in terms of expected good results and volume growth for the fiscal year 2021 (FY21).
Analyst Views and Recommendations
Notably, CLSA has maintained an 'Outperform' rating on Eicher Motors, with a target price of Rs 24,000. This recommendation suggests that investors may still find it worthwhile to consider purchasing the stock, given the potential for further gains.
Potential Risks and Key Considerations
While the stock's recent performance has been positive, it’s important to note that the sharp climb in recent months suggests that the stock may need a breather or could experience a correction. This is a natural occurrence in the stock market, reflecting the ebb and flow of investor sentiment and performance.
Before making any investment decisions, investors should carefully consider the broader market conditions, the company’s financial health, and their personal investment strategy. Diversification is often recommended to mitigate risks.
Conclusion
In conclusion, the stock price surge of Eicher Motors in 2020 appears to be a promising opportunity for investors, especially given the positive upgrades from brokerage houses and the healthy upside potential. However, caution should be exercised, considering the likelihood of a short-term market correction. It is crucial for potential investors to conduct thorough research and, if necessary, consult with financial advisors to make informed decisions.