Published on 16/03/2017 3:24:46 PM | Source: Motilal Oswal Securities Ltd
Buy Tata Motors Ltd For Target Rs.653.00 - Motilal Oswal
JLR Feb-17 below est at 54,576 units (+4% YoY)
LR volume declines ~9%, while Jaguar grew ~57% driven by F-Pace and XE
* JLR Feb-17 wholesale volumes grew ~4.3% YoY (+12% MoM) to 54,576 units (estimate: 58,000 units), driven by F-pace and XE.
* Jaguar volumes grew ~57% YoY to 16,096 units (estimate: 16,500 units), driven F-Pace and XE. However, volumes of other Jaguar models continue to moderate.
* Land Rover volumes declined by ~9% YoY to 38,480 units (estimate: 41,500 units), due to product fatigue and discontinuance of old Discovery on the back of its launch in 4QFY17 and Defender.
* JLR Feb-17 retail volumes grew ~9% YoY (-14% MoM) to 40,978 units, driven by 81% growth in retail volumes of Jaguar while LR volumes continued its decline (-6% YoY).
* Jaguar retail volume growth was driven by F-Pace (at ~5.3k units) and XE growing by 25% YoY. Jaguar XF witnessed ~17% decline YoY.
* Land Rover’s retail volumes declined by 6% YoY, mainly due to discontinuance of Discovery and Defender, RR Sport (~-3%), while Discovery Sport (+6%), RR (+11%) and RR Evoque (+6%) showed a decent growth.
* In terms of regional retail sales performance, China led the way with a 40% YoY growth primarily led by newly launched XF long wheel base and North America too showed a strong growth of 16% led by high demand for F-Pace. Besides UK supported with a 14% YoY growth. Europe and rest of world declined by ~2% and ~7% YoY respectively.
* For JLR, we are factoring in for wholesale volume growth of ~10% in FY17 to ~597k. This implies residual growth of ~6% or ~run-rate of ~68.2k units.
* The stock trades at 13.2x/6.7x FY18/FY19E consolidated EPS. Maintain Buy with a TP of INR653 (FY19 SOTP-based) for ordinary shares and INR457 for DVR (~30% discount to TP for ordinary shares).
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