Eicher excellent performance continues. Recorded highest ever monthly sales of 64,459 during July 2017 recording YOY growth of 20.8%. While growth rate has slow down, in my opinion it would continue to remain in range of 20%. I came across Nirmal Bang equity report which provided very useful comparison between Activa sales over years and capacity. Honda also faced constraint of capacity due to major spurt and demand for Activa. However, even after capacity added, Activa contnue to show normal sales growth. Enclosing two key graph from the report.
Kotak, on the another hand, find that Eicher would reach satuaration point in India and does not justify growth rate at current market capitalisation. The main reason for conservatism by Kotak is that is expect at in order to justify current valuation, Eicher need to grow at very high rate for long period. Find enlcosed Kotak working on Eicher
While Kotak is true that it is very difficult to continuous grow at substatial growth rate over long period, at least, last decade performance of Royal Enfield and 5-6 performance of Activa in Honda Scooter does provide justification for exception to rule. Whether Eicher would follow mean reversion or case of grativational force or beomc exmaple of escape volacity only time would tell.
Personally I am optimistic and Eicher is my top holding since last 3 years. Views of other members are welcome.
Discl: My view may be biased due to my holding in the company.