Eicher Motors proved full of verve, moving higher for the second day running, on the back of a solid 78.5% spurt in net profit.

Thursday, the scrip climbed 3% on BSE to Rs 85.80 in early trades. It was trading near the day's high. Around 3,400 Eicher Motors shares changed hands on BSE. The scrip gained 2.5% on Wednesday to Rs 83.15 after it announced results after trading hours on Tuesday.

The stock has largely held firm on the bourses encouraged by the company's improving performance, rise in vehicle sales and the strong response to its newly launched 16-tonne commercial vehicle. With the new launch, the company has made a foray into the medium commercial vehicles segment.

Analysts are enthused by EML's Q3 results. Volume growth and the rise in operating profit margin due to stringent cost control boosted EML's Q3 performance. For Q3 ended 31 December 2002, EML posted a 78.5% leap in net profit to Rs 10.48 crore (Rs 5.87 crore). The Q3 net profit was much higher than market expectations of Rs 9.5 crore.

On the back of a rise in vehicle sales, net sales surged 29% in Q3 to Rs 154.14 crore (Rs 1.54 billion). There was a 33.3% increase in sales volume to 3,211 units.

EML is the second largest player in the commercial vehicles sector. It is reputed for its superior vehicles with higher fuel efficiency and lower maintenance costs. The company recently made a foray into the medium commercial vehicles segment by launching a 16-tonne vehicle that has received good response. Analysts say a ramp-up on MCV volumes by EML would be the next trigger for the stock.

EML was incorporated in 1982 and introduced its first product, the Canter, a 6-tonne GVW truck manufactured at its state-of-the-art plant at Pithampur, Indore, in collaboration with Mitsubishi Motors Corporation, Japan, in 1986. From a single 6-tonne GVW truck in 1986, the company's range today extends from 5-t to 16-t GVW trucks and the Skyline and Voila range of buses. All its products can be offered in BS II compatible options. It also has one of the best CNG technologies in the world in CNG buses.

From a market share of 11.5% in FY 1999-2000, EML's share improved to 17.5% in FY 2001-02. This happened even as industry sales fell 8.6% during the period. The company's domestic sales increased at a CAGR of 13.5% and exports surged at a CAGR of 55%.

Meanwhile, EML has recently bid for acquiring control over Punjab Tractors. The Punjab state government proposes to divest its stake in Punjab Tractors.