Eicher Motors' share price surged 5 percent after it posted marginally better-than-expected September quarter earnings. The revenue of the company declined 3 percent on a year-on-year (YoY) basis to Rs 2,134 crore, against expectations of Rs 2,000 crore.

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The net profit of the company fell 40 percent YoY to Rs 343 crore versus Rs 573 crore in the corresponding quarter last fiscal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) —a measure of operational profitability—fell 13 percent to Rs 472 crore, while margins declined to 22.1 percent from 24.7 percent.

According to Siddhartha Lal, managing director of Eicher Motors, Q2 witnessed a healthy demand and pick-up in business activities in the auto industry. "It has been encouraging for our motorcycle business at Royal Enfield as we have seen increased revival in consumer sentiment and demand," he added further.

Furthermore, Nomura retained a 'neutral' rating on the stock with a target price of Rs 2,328 per share saying that it expects it to move higher if the company's new models are successful or demand is strong.

The brokerage raised Volvo Eicher Commercial Vehicle (VECV) volume estimates to 21 percent/35 percent/32 percent and margin to 2.6 percent/5.5 percent/7.8 percent.

"Production is constrained due to variant mix and may remain at 70,000-75,000 for now," added Nomura.

In the September month, the Royal-Enfield maker reported a 19.7 percent growth in sales. However, during the September quarter, it reported a 9 percent decline YoY to 1,50,519 units.

The company has continued to see improvement in its sales as they surged 11 percent to 66,981 units in October. While, the VECV segment also reported a 34 percent jump in its domestic vehicles in September.

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