We estimate ~9% volume growth in FY16, implying a residual monthly rate of 47,120 units or 18% growth for FY16.
Land Rover declined ~2% YoY to 26,509 units (our estimate: 25,642 units), while Jaguar grew ~42% YoY to 6,594 units (our estimate: 5,658 units).
In terms of regional retail sales performance, China volumes declined 31% YoY (due to slowing economic conditions and model transitions, specifically the launch of the locally produced Range Rover Evoque and Discovery Sport. The Jaguar XF and XJ are in their run-out phases ahead of upcoming launches. The month was also impacted by the Tianjin port explosion on 12 August, which affected up to 5,800 imported Jaguar Land Rover vehicles. US volumes grew ~13% YoY and Europe volumes grew 18.7% YoY. However, UK volumes grew 93% YoY.
We are lowering our EPS estimates by ~17% to Rs 43 for FY16 and by ~6% to Rs 54 for FY17 to factor in, lower JLR volumes due to higher-than-estimated impact of transitory issues, lower margins in JLR due to operating leverage, and lower volumes in LCVs. Even after factoring for lower China margins, we expect TTMT’s consolidated EPS to grow at a CAGR of ~17% over FY15-17.
The stock trades at 8.2x FY16E and 6.5x FY17E consolidated EPS. Maintain buy with a target price of Rs 488 (FY17E SOTP-based) for ordinary shares and R341 for DVR (~30% discount to target price for ordinary shares).