Motilal Oswal has recommended selling Eicher Motors and has set a target price of INR 4,000.

Eicher Motors' operating performance in the second quarter of fiscal year 2025 fell short of expectations, with margins contracting by 90 basis points year-on-year to 25.5%. This was primarily due to increased promotional and warehousing expenses.

While the VECV segment, which focuses on commercial vehicles, outperformed industry growth, it did so at the expense of margins, which decreased by 70 basis points year-on-year to 7.1%. The management has indicated that they will continue to prioritize demand generation activities over margin recovery.

The revisions to earnings estimates reflect a cautious outlook, as slower growth is expected to limit the potential for premium valuations in the future.