Motilal Oswal is bullish on Tata Motors has recommended buy rating on the stock with a target price of Rs 562 in its research report dated October 10, 2017.
Motilal Oswal's research report on Tata Motors
JLR Sep-17 wholesale volumes grew 8.4% YoY (+29.1% MoM) to 57,365 units (in-line), including China JV’s contribution at 8,045 units (+23%). Jaguar volumes grew 6.6% YoY to 17,284 units (est. of 15,750), led by lower sales of XE. Land Rover (LR) volumes were up 9.2% YoY at 40,081 units (est. of 42,208), led by the ramp-up of the all-new Discovery in North America and China, and also RR Velar introduction in the UK and EU. JLR Sep-17 retail volumes increased 6.6% YoY (+69% MoM) to 65,097 units, led by an increase in LR and Jaguar volumes by 7.7% and 3.9%, respectively. Jaguar retail volumes were driven by F-Pace (to ~7.7k units) and XF (volumes up 29.4% YoY). Jaguar XE volumes declined 15.2% YoY. LR’s retail volumes increased 7.7% YoY, mainly led by a continued rise in Discovery Sport (+3.6%) and RR (+0.3%) volumes, while RR Sport and RR Evoque volumes declined 6.1% and 6.6%, respectively. Region-wise, China reported strong volumes at 13.8k units (+20% YoY), including China JV volumes of 7,929 units. Growth in China reflects the introduction of the long-wheel base Jaguar XFL, and also strong sales of F-PACE, Discovery Sport, Range Rover Sport and Evoque. Retail sales were down in the UK (-3.7%), but grew 1% in EU and 10.2% YoY in Rest of World. Andy Goss, Jaguar Land Rover Group Sales Operations Director said “September saw a solid performance across both of our brands, thanks in large part to continued customer demand for the Jaguar F-PACE and Discovery Sport, as well as an impressive consumer response to the new Range Rover Velar.
The stock trades at 21.3x/6.9x FY18E/FY19E consolidated EPS. Maintain Buy with a target price of INR562 (Sep-19 SOTP-based) for ordinary shares and INR392 for DVR (~30% discount to TP for ordinary shares).
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