Dhiraj, Eicher is one of my top 5 holdings for the past few years.
As disposable incomes rise, Premiumisation should be witnessed in the motorcycle market, and premium bikes will take market share from the 100 110 cc bikes.
I believe that future rate of growth of Eicher will depend on how well they focus on penetration of Tier 2, 3 Towns and in Rural India.
Major transformation is happening in Rural India with better water management.
Farmers are transiting from one crop to three crops in one season as water becomes available for 12 months.
Pace of change is rapid, hundreds of thousands of farming family :
While this transformation of rural family incomes will open several investment opportunities, relevant to Eicher - An Aspirational Premiumisation play - in Rural India - does exist.
Current P/E is a concern, but I am keen to understand how Eicher views the Tier 2 / 3 / Rural India Opportunity over the medium term.
PS: As a side note one has to acknowledge the role of the CSR law - under which 2% profits are spent on philanthropy. Non governmental initiatives aided by benign government support is creating a rural agri-transformation.
I first understood about dam repair / check dams about 3 years ago as a known NGO (Raah Foundation) invested in repair of a few dams in Rural Maharashtra near Mumbai. In one season, farmers transformed their income by going from 1 to 3 crops.
NGO's target water conservation: Art of Living have pumped in over a billion rupees to rejuvenate 13 rivers, Isha Foundation's save your rivers campaign is currently running and well documented.
Ms. Ruia - the mentioned lady hereabove is Atul Ruia's (Phoenix Mills) mother, and her NGO is supported by Ruia.
Huge amount of funds are also being deployed by NGO's very effectively, and the well documented success stories are attracting significant new funding for the same theme in varied geographies.
Paani foundations efforts in particular where 1500 villages will address water shortage in 2017 alone are super commendable. Dr. Bhatkal + Aamir Khan: Interviews are illuminating and reveal the logistical challenges and support required to set up such initiative. However, the Returns on such initiatives are immediate and disproportionate, tens of thousands of lives will be transformed and financially empowered.
(Of course as the movement scales over the decade and agri output jumps, the challenge will move towards cold storage / export / ensuring demand supply mismatch does not create "glut based" low prices)
As investors - this is a very significant mega trend development in rural India now and bears close watching.