ICRA has re-affirmed 'AA/A1+' ratings for the Rs 240 million bank facilities of Eicher Motors (EML). The outlook on long-term rating is 'Stable'. 

The re-affirmation of EML's ratings takes into account the strong market position of the company in the niche segment of leisure bikes which has helped the company record a robust volume growth over the past two years. The rating also factors in the strong growth expected in 2014 in light of the new product launches as well as waiting period for company's products providing revenue visibility.

The ratings also factor in the strong financial risk profile of the company characterized by negligible debt and large cash balances and liquid investments as well as the company's status as a holding company of VE Commercial Vehicles (VECV, which is EML's 54.4% subsidiary), an established player in the domestic light and medium commercial vehicle (CV) industry. 

However, EML's long-term rating continues to be constrained by its overall marginal position in the domestic two-wheeler industry and risks associated with the CV business that remains inherently cyclical and is presently witnessing significant slowdown on account of moderating economic activity and rising competitive industry following entry of new players.

Although the company has significant investments going forward, both for EML and VECV, the company's significant cash and liquid investments coupled with expected healthy cash accruals would support strong financial risk profile.

Going forward, besides its own risk profile on a standalone basis, EML's ratings will remain linked to VECV's ability to improve its market presence and capitalize on the large investments made over the past few years while sustaining profitability. 

Shares of the company gained Rs 69.45, or 1.17%, to trade at Rs 6,025. The total volume of shares traded was 1,365 at the BSE (2.37 p.m., Tuesday).