17 March 2015
Update | Sector: Automobiles
TP: INR690 (+21%)
JLR Feb-15 wholesale de-grew 1.2% YoY (in-line)
Downgrade EPS by 6-9% to factor delayed JLR volume recovery
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Free float (%)
Avg Val(INRm)/Vol‘000 2,747/5,659
Financial Snapshot (INR Billion)
2015E 2016E 2017E
2,621 3,125 3,645
Adj. EPS (INR)
EPS Gr. (%)
Div. Yield (%)
249.4 313.0 387.8
JLR Feb-15 wholesales have de-grew by 1.2% YoY (up 5.5% MoM) to 38,541
units (est 38,663 units) as both Jaguar and LandRover face pressure.
Land Rover de-grew by ~1% YoY to 32,093 units (est 33,025 units), while
Jaguar de-grew by 2.8% YoY to 6,448 units (est 5,639 units).
FY15YTD wholesale volumes for Land Rover grew by 10.5%, whereas Jaguar
has de-grew 4.2% on YTD basis, resulting in ~8% overall volume growth.
In terms of regional retail sales performance, China volumes declined by
20.3% YoY; US volumes grew by 11.2% YoY and Asia Pacific Volumes were
up by 14.2% YoY and UK volumes also grew by 14.2% YoY.
Jaguar’s retail volumes continue to decline (except F-Type) with XF de-
growing by 21% YoY (19.3% MoM); XJ also de-grew by 18.1% YoY (26.5%
Land Rover’s retail volumes de-grew by 4% YoY with Discovery growing by
32.6% YoY (down 29.2% MoM) and Range Rover (incl. new) growing by
31.2% YoY (down 10.9% MoM). Freelander’s phase out has resulted in de-
growth of 58.4% YoY.
Commenting on the July retail performance Andy Goss, Jaguar Land Rover
Group Sales Operations Director said:
Range Rover achieved its best
ever February performance this month, with sales of 4,310 vehicles. This
was also the case for the Jaguar F-TYPE, which retailed 795 vehicles in
February. With sales underway for the Discovery Sport and soon to begin for
the Jaguar XE, we are excited to see the success of our ever-evolving product
JLR’s volumes have been impacted due to several transitory events
including a) brownfield capacity expansion at Solihull (by Dec-14) impacting
production at existing lines, b) captive engine plant (started in Oct-14), c)
China Chery JV plant (started in Oct-14) resulting in gradual transition of
manufacturing of select products from UK to China, d) Launch of Discovery
Sport (phasing out of Free Lander 2), and e) Jaguar XE launch (4QFY15). We
expect JLR’s wholesale volumes to normalize from 1QFY16 onwards.
We lower our EPS estimate for FY15/FY16/FY17 by 14%/8.5%/6% to
INR46/64/77 to factor in for delayed recovery in JLR volumes. The stock
trades at 8.9x/7.4x FY16/FY17 consol EPS of INR64/77. Maintain
TP of INR690 (FY17 SOTP-based) for ordinary shares and INR482 for DVR
(~30% discount to TP for ordinary shares).
(Jinesh@MotilalOswal.com); +91 22 3982 5416
(Jay.Shah@MotilalOswal.com); +91 22 3078 4701
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