Published on 19/07/2019 9:38:35 AM | Source: Motilal Oswal Services Ltd

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JLR’s Jun’19 wholesales exceed expectations

driven by a low base and market-level initiatives

* JLR’s wholesale volumes grew 15% YoY (+8.3% MoM) to 43.2k units (our estimate: ~36.6k), including China JV volumes of 6.8k units (-11% YoY).

* Jaguar volumes increased 24% YoY to 12.8k units (our estimate: 10k), while Land Rover volumes grew ~12% YoY to 30.4k units (our estimate: 26.5k).

* JLR’s retail volumes declined ~10% YoY in Jun’19, led by de-growth across markets (except UK), particularly in China (-12.3%) and Europe (-11.7%).

* Jaguar’s retail volumes fell ~8.5% YoY, led by a decline in sales in models like XF, F-pace and XK/E-pace, while I-Pace sales came in at ~1.6k units.  LR’s retail volume declined ~10% YoY due to lower sales across models, except RR Evoque (+3.4% YoY to 7k units).

* Mr Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “While challenging conditions continue to impact other regions, we were pleased to see sales return to growth in the UK, where we are outperforming the market aided by higher sales of the new Range Rover Evoque, Land Rover Discovery, Jaguar I-PACE and the new Jaguar XE. For Jaguar, initial customer response to the XE is encouraging following the debut of the sporty saloon’s new enhanced exterior design, luxurious interior and advanced technologies. The unprecedented treble World Car award-winning I-PACE continues to delight and excite, bringing new customers to the brand. At Land Rover, the new Range Rover Evoque luxury compact SUV continues to strengthen its global sales performance following its recent debut.”

* A sustainable recovery in volumes at JLR, particularly in the profitable markets of China, along with the ongoing cost cutting initiatives, is key to value-accretive growth and stock performance. This is particularly important due to the impending downcycle in the cash-cow India CV business in FY21.

* The stock trades at 11.8x/10.2x FY20/21E consol. EPS. Maintain Neutral with a target price of INR183 (Mar’21 SOTP-based).


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