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Maintain ‘buy’ on Tata Motors, target Rs 471: Motilal Oswal

JLR Nov-15 wholesale volumes were up ~24% YoY (5% MoM) to 51,021units (v/s est. 46,953 units).

Maintain ‘buy’ on Tata Motors, target Rs 471: Motilal Oswal
Tata Motors dipped as much as 4.6 per cent, adding to Friday's loss of 2.99 per cent to hit its lowest since October 15. (Photo: Reuters)

JLR Nov-15 wholesale volumes were up ~24% YoY (5% MoM) to 51,021units (v/s est. 46,953 units). We estimate ~11% volume growth in FY16, implying a residual monthly rate of 46,995 units or 12% growth for FY16. Land Rover grew by ~19% YoY to 41,952 units (v/s est. 37,769 units), while Jaguar grew by ~47% YoY to 9,069 units (est. of 9,184 units).

In terms of regional retail sales performance, US volumes grew by ~52% YoY, Europe volumes were up by 68% YoY and UK volumes grew by 70% YoY. However, China volumes were down 22% YoY.

Jaguar’s retail volumes were up by 33% YoY, led by XE which did volumes of 3,953 units (launched only in UK, Europe and China), rest complete portfolio saw double digit de-growth. Jaguar portfolio saw growth of 33% YoY.

Land Rover’s retail volumes were up 26% YoY, with growth across portfolio except RR-Evoque. We estimate TTMT’s consolidated EPS to grow ~13% CAGR over FY15-18. The stock trades at 11.6x/8.7x FY16/FY17 consolidated EPS.

We maintain ‘buy’ with a target peice of R471 (FY17 SOTP-based) for ordinary shares and R329 for DVR (~30% discount to TP for ordinary shares).

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First published on: 11-12-2015 at 01:15 IST