Published on 15/01/2020 10:11:00 AM | Source: Motilal Oswal Services Ltd

Buy Tata Motors Ltd For Target Rs.220 - Motilal Oswal

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JLR wholesales strenghten in Dec’19

China retails outperform for the sixth straight month

* JLR’s wholesale volumes increased 10% YoY to ~50k units (in-line) in Dec’19 while the China JV volumes were up ~10% YoY at ~5.5k units.

* Jaguar volumes declined ~10% YoY to ~12.7k units (v/s est. 13.3k units), while Land Rover (LR) volumes increased ~19% YoY to ~37.3k units (in-line).

* JLR’s retail volumes were flat YoY, marginally up 1.3% YoY (+14% MoM) in Dec’19 with recovery in China (+26.3%), but decline in other markets like the UK (-3%), Europe (-5%) and RoW (-8%). China witnessed recovery in volumes for the sixth consecutive month.

* Jaguar’s retail volumes declined ~17% YoY in Dec’19.

* LR’s retail volumes were up ~10% YoY, driven by higher sales of RR Evoque (+33%), the new LR Discovery Sports (+20%) and the LR Discovery (+6.5%).

 *Mr. Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “2019 was a year of two halves for Jaguar Land Rover. Over the last six months, we saw a marked improvement in China, where intensive work with our retailers, combined with significant process and product improvements are starting to gain traction. Elsewhere, adverse market conditions continued to affect the industry, but encouragingly in North America, we closed 2019 successfully with a new record year. Following a record 2018, Jaguar sales were down in 2019. With increasingly challenging market conditions, we chose not to weaken the iconic Jaguar brand through chasing volume at any cost.”

* The stock trades at 16x FY21E consol. EPS and 1x P/B. Maintain Buy with a target price of INR220 (Dec’21 SOTP-based).


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