* We expect JLR’s (incl JV) volume to be ~6% YoY (+13% QoQ) led by phasing out of Discovery volume. Net realization should increase by ~14% YoY (flat QoQ) led by ramp up of F-Pace and increase in share of China. EBITDA margin would decline 550bp YoY (+140bp QoQ) to 10.7% led by GBP650m of forex hedge loss estimated for the quarter along with phasing out cost of Discovery. Adjusted PAT likely to decline ~41% YoY (+200% QoQ) to GBP333m.
* S/A volume grew 1.2% YoY (+12% QoQ), led by a 23% rise in PVs due to Tiago and newly launched Hexa while CVs declined by ~5% due to lower than expected pre buying of BS-III vehicles. Margin likely to decline 480bp YoY (+180bp QoQ) to 3.3%, as the share of CVs decrease & higher commodity cost. Adjusted PAT is likely to be INR-6.8b (vis-à-vis INR5b in 4QFY16) led by higher interest cost & higher depreciation.
* We have reduced EPS estimate of FY18E/FY19E by 18%/12%, led by higher interest cost & depreciation at standalone level, and expected moderation in CV growth.
* The stock trades at 10.7x FY18E and 10.8x FY19E EPS. Buy.
Key issues to watch
* Impact of Brexit on JLR business.
* Current demand trends for JLR and outlook, particularly in China and the US.
* Update on Chery JV operations and CV business outlook.
To Read Complete Report & Disclaimer Click Here
For More Sharekhan Disclaimer http://www.sharekhan.com/Common/Research_Reports_Disclaimer.aspx
Above views are of the author and not of the website kindly read disclaimer