Dear all,
Steady Performance; New products at JLR to drive growth
· In 1QFY17, Tata Motor's consolidated revenues increased by 9.0% YoY to INR 670bn, led by strong JLR sales. JLR registered revenue of EUR 5.4 bn, up 9% YoY. Net profit stood at EUR 304mn down 38% YoY due to lower EBITDA margin, higher depreciation (partially offset by share of china JV profit) and forex impact of EUR 207mn.
· Standalone basis, during the quarter, all segment witnessed growth M&HCV grew by 7.8% YoY, LCV +11.6% YoY, Passenger vehicle +6.3% YoY and Car segment +15.1% YoY on the back of strong traction to the recently launch Tiago.
· Jaguar Land Rover wholesales and retails (both excluding China JV) for the quarter were 120,776 units and 118,704 units respectively. China JV wholesales and retails for the quarter were 13,588 units and 14,059 units Overall Retail sales were up in all regions reflecting strong sales of the Discovery Sport, XE and the new F-PACE - North America up 17%, UK up 18%, China up 19%, Europe up 16% and Overseas markets up 6%.
Valuation: Recovery in CV business, Healthy product pipeline and steady performance from JLR coupled along with receding worries related to demand in China paint a positive outlook for the company. Currently, the stock is trading at P/E of 9.4x FY2018E. Since the stock has run up considerably (15% from last reco price), we rate the stock an OUTPERFORMER with a Target Price of INR 559 assigning the PE of 10x FY2018E. Risks: Slowdown in Chinese market, increase in commodity prices and interest rates.
Regards,
CSEC Research
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