Having surged 22% in the last month, Eicher Motors, the maker of Royal Enfield, could rally further, Bank of America Securities said. While maintaining its Buy call on the stock, the brokerage has raised the target price to Rs 7,500 (from Rs 6,300), implying an upside potential of nearly 10%. The stock ended over 1% higher at Rs 6,893.

What’s working for Eicher? According to the international brokerage, a host of factors. Its channel checks show that large eastern states such as Bihar, West Bengal, and Uttar Pradesh — which together account for a third of the industry’s volumes — remain underpenetrated, with household two-wheeler ownership at just 30%.

Despite this, Royal Enfield has posted sharp market share gains in these regions, reflecting its aspirational brand pull, targeted product interventions, and improving financing options in rural pockets.

In another cluster of states — Haryana, Madhya Pradesh, and Rajasthan — which account for around 20% of volumes, penetration levels are already above 60%. Here, demand is shifting towards premium bikes.

TVS and Eicher have been key beneficiaries, with BofA highlighting that “additional demand buying” is driving growth. Eicher, in particular, has become more accessible to new buyers thanks to the GST rejig, strengthening its case as a market-share gainer.

The GST rate cut, according to BofA, is a game changer for premium manufacturers. For Eicher, it has reduced the effective price of its flagship Classic and Bullet models to below Rs 2 lakh. This pricing sweet spot could unlock upgrade demand from the 150–250cc segment, where aspirational buyers have long eyed Royal Enfield but were held back by affordability. The brokerage notes that even modest price interventions in the past have spurred volumes, making GST a clear catalyst for further expansion.Crucially, BofA does not view regulatory changes such as anti-lock braking system (ABS) safety norms or the rise of EVs as near-term risks for Eicher.

Instead, it argues that the GST cut resolves the “margin versus growth” debate, giving the company headroom to pursue expansion without squeezing profitability — a strategy it has long followed. Product launches lined up for next year could add another layer of momentum, experts say.

“Eicher is our preferred pick in two-wheelers,” BofA wrote, adding that while all OEMs benefit from the GST cut, the superior franchise strength of TVS and Eicher justifies their richer valuation multiples. With growth levers back in play, supportive macros, and policy tailwinds, the brokerage expects Eicher to remain a major beneficiary of the ongoing two-wheeler upcycle.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)