9 September 2016
Tata Motors
BSE Sensex
28,797
S&P CNX
8,867
Update | Sector: Automobiles
CMP: INR573
TP: INR647 (+13%)
Buy
JLR Aug-16 volumes in line at 42,260 units (+28% YoY)
LR grows ~10%, while Jaguar zooms ~98% driven by F-Pace and XE
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
12M Avg Val (INR M)
Free float (%)
TTMT IN
3,395.9
599/266
9/45/54
1,945.9
29.2
4,037
67.0
Financials Snapshot (INR b)
Y/E Mar
2016 2017E
Net Sales
EBITDA
NP
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
15.5
2.4
5.1
0.0
13.3
2.0
4.9
0.5
2,756
402.4
125.2
36.9
-15.5
237.9
18.3
14.3
0.7
2,914
424.8
146.0
43.0
16.7
279.9
16.6
12.0
8.4
2018E
3,281
493.8
187.6
55.3
28.5
331.9
18.1
13.2
8.7
10.4
1.7
4.1
0.7
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-16 Mar-16
33.0
16.8
25.0
25.2
33.0
19.2
22.1
25.7
Jun-15
34.4
16.5
41.9
7.3
FII Includes depository receipts
JLR Aug-16 wholesale volumes grew ~28% YoY (-3.8% MoM) to 42,260 units
(estimate: 43,500 units), driven by F-Pace and XE.
Jaguar volumes grew ~98% YoY to 13,038 units (estimate: 13,500 units),
driven XE and F-Pace. However, volumes of other Jaguar models continued
to moderate.
Land Rover (LR) volumes grew ~10% YoY to 29,222 units (estimate: 30,000
units), driven mainly by growth in Freelander and Discovery Sports.
JLR Aug-16 retail volumes grew ~26% YoY (-17% MoM) to 36,926 units,
driven by 104% growth in retail volumes of Jaguar and 9% growth for LR.
Jaguar retail volume growth was driven by recently launched F-Pace (at
~4.5k units) and XE (+50% YoY).
LR’s retail volumes were up 8.6% YoY, with growth driven by Discovery
Sport (+57%) and supported by Discovery (+39%). Range Rover and Range
Rover Sport volumes grew 5% and 7% YoY, respectively. On the other hand,
RR Evoque volumes declined 9%.
In terms of regional retail sales performance, North America led the way
with 45% YoY growth on the back of strong performance of newly launched
XE and F-Pace. Europe and China too supported with 37% and 34% YoY
growth, respectively. However, UK sales declined 3% YoY.
Commenting on the performance, Andy Goss, Jaguar Land Rover Group
Sales Operations Director said, "We continue to grow our sales, with
impressive performances across both of our brands. Sales in North America
were particularly strong, where we sold over 10,000 vehicles in August
alone. The Evoque Convertible has performed well in its first few months of
sales and will play a key role in continuing Range Rover's 45-year success
story."
For JLR, we are factoring in wholesale volume growth of 13% in FY17 to
~614k. This implies residual growth of ~8% or ~run-rate of ~56.2k units (v/s
~44.1k in FY17 YTD).
The stock trades at 13.3x/10.4x FY17/FY18E consolidated EPS. We raise our
FY17E/18E EPS estimates by 8%/3%. We also increase our EV/EBITDA
multiple for JLR to 4.5x (v/s 4x previously) to factor in a) stronger Cherry JV
performance and b) favorable GBP not reflecting in FY18 estimates due to
hedges. Maintain
Buy
with a TP of INR647 (FY18 SOTP-based) for ordinary
shares and INR452 for DVR (~30% discount to TP for ordinary shares).
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Venil Shah
(Venil.Shah@MotilalOswal.com); +91 22 3982 5445
/Aditya Vora
(Aditya.Vora@MotilalOswal.com); +91 22 3078 4701
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.