Volvo to sell further stakes in Eicher for $278 million

According to reports Sweden’s Volvo AB is believed to sell 1 million shares in Indian auto firm Eicher Motors in a deal valued at $ 278 million.Volvo is said to be offering 1,00,5610 shares in a price range of 17,190 to 18, 190 rupees in an open market sale. With this offer for sale Volvo will be exiting from its investment in Eicher.Volvo previously in the month of March of 2015 had sold 1.27 million shares. Volvo sold these shares for around $296.05 million (2.5 billion Swedish crowns).

The Volvo Group is one of the world’s leading manufacturers of trucks, buses, construction equipment and marine and industrial engines. The group also provides complete solutions for financing and service. The Volvo group, with its headquarters in Gothenburg, employs about 100,000 people and has production facilities in 19 countries and sells its products in more than 190 markets. Volvo shares are listed on Nasdaq Stockholm.

Eicher Motors Limited (EML) is the flagship company of the Eicher Group, which was a catalyst in the green revolution in India with the production of India’s first agricultural tractor in 1959. EML is now a leading player in the Indian automotive space. It owns the iconic Royal Enfield motorcycle business, which leads the premium motorcycle segment in India. The oldest motorcycle company in continuous production world-wide, Royal Enfield has witnessed a huge surge in demand in the recent past, and is charting its course to be the leading player in the mid-size motorcycle segment globally.

Eicher motors Limited has been an outright outperformer for last 10 years. The annualized returns delivered by the stock for a 10 years period is 49% (rounded off). The annualized return for last 5 years has been 79 percent. For last year alone the stock has jumped 145 per cent approximately. While the stock has literally doubled every year for last 3 years by delivering an annualized returns of 101 per cent.

The stock is current trading at a PE of 70.33. The dividend yield for EML is 0.29 per cent. The YTD performance has been 15 per cent for EML whereas the Auto index has delivered negative 5 percent.One year returns for Auto index has been 14.50 per cent. Eicher motors has clocked a revenue growth of 24 percent for a period of five years and has maintained net margins at around 7.62 percent considering a period of 5 years.