Published on 17/12/2018 10:56:51 AM | Source: Motilal Oswal Securities Ltd

Buy Tata Motors Ltd For Target Rs.246.00 - Motilal Oswal

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JLR delivers in-line wholesale volumes for Oct’18

Volumes up 1% YoY for Jaguar, but down 8% YoY for LR

*  JLR’s wholesale volumes declined 6% YoY (-11.7% MoM) to 46.8k units (our estimate: 45.5k) in Oct’18 – this includes China JV volumes of 2.4k units.

*  Jaguar volumes increased 0.6% YoY to 13.4k units (our estimate: 14.5k), while Land Rover volumes declined 8.4% YoY to 33.4k units (our estimate: 31k).

*  JLR’s retail volumes declined 4.6% YoY in Oct’18, impacted by a decline of 49% in China retails and 13.5% YoY in Europe retails. UK and US volumes grew 46.9% and 24.1% YoY, respectively.

*  Jaguar retail volumes grew 11.6% YoY, driven by models like XE, E-pace and I-Pace. Volumes, however, declined substantially for other models.

*  LR’s retail volumes declined 10.5% YoY, as growth in Range Rover (+18%), Range Rover Sport (+13%) and Velar (+2.5%) was more than offset by lower volumes across other models

*  Mr Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “We continue to face challenges in some markets, notably China. Despite this, we saw a strong performance in the UK and North America, which is a testament to our customers’ loyalty to our brands and the positive response of new customers to our evolving product line-up. As announced last week, we are implementing a turnaround plan and taking all the necessary steps to rejuvenate our business especially in China. This involves working closely with our sales network and balancing production with demand in the present market conditions to achieve healthy development for our future that is not unduly dependent on incentives.”

*  The stock trades at 8.3x FY20E consolidated EPS. Maintain Buy with a target price of INR246 (Sep’20 SOTP-based).


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