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Wholesale volumes grew 24% YoY and 19% QoQ

* Wholesale volumes (ex-China JV) grew 24% YoY/19% QoQ to 94.6k units (v/s est. 84.5k units). FY23 wholesales grew 9% YoY to 321.3k units.

* Land Rover (LR) volumes improved 34% YoY/22% QoQ to 84.9k units, while Jaguar volumes declined 27% YoY/3% QoQ to 9.7k units. These numbers exclude China JV. ? Range Rover (RR) and RR Sport production volumes continued to increase, with     wholesale volume of 32,950 units in 4QFY23 (v/s 28k in 3Q). Defender wholesale volumes increased to 27,513 units (v/s 23

Retail volumes grew 30% YoY/21% QoQ

* 4Q retails grew 30% YoY (+21% QoQ) to 102.9k units, and declined 6% in FY23 to 354.7k units. Retails were higher in all the markets, with strong growth in EU (+46% YoY), UK (+42% YoY), RoW (+30%), China (+29%) and US (+12%).

* The order book declined by 15k units QoQ to 200k units, as wholesales improved by 15k QoQ. RR/RR Sport/Defender contributed 76% to the order book (74% as of Dec’22-end).

Other financial data

* FCF is indicated to be over GBP800m positive in 4Q and GBP500m positive in FY23. In its 3QFY23 earnings call, the management had guided for 4Q FCF to be slightly lower than 3Q FCF of GBP490m. This would imply net debt of ~GBP3b by Mar’23 (v/s GBP3.85b as of Dec’22).

* Based on JLR’s beat on 4Q wholesale volumes, our 4QFY23 revenue/ EBITDA/PAT estimates for JLR now stand at GBP7.2b/GBP1.1b/ GBP265m (v/s GBP6.6b/GBP0.85b/ GBP179m earlier). Our 4QFY23 estimates for consolidated revenue/EBITDA/PAT now stand at INR1,031b /INR136.6b/INR34.4b (v/s INR975.5b/INR113.25b/INR27.1b earlier).

Valuation and view

* All three businesses of TTMT are in a recovery mode. While the India CV business will see a cyclical recovery, the India PV business is seeing a structural recovery. JLR is also witnessing a cyclical recovery, supported by a favorable product mix. However, supply-side issues will delay the recovery process. While there will be no near-term catalysts from the JLR business, the recovery in the India business (~50% of SoTP) will continue. The stock trades at 16.9x/13.7x FY24E/FY25E consol. EPS, and 4x/3.4x FY24E/FY25E consol. EV/EBITDA. We have a Buy rating with a TP of INR525 (Mar’25 SOTP).

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