Motilal Oswal is bullish on Tata Motors has recommended buy rating on the stock with a target price of Rs 593 in its research report dated January 10, 2018.
Motilal Oswal's research report on Tata Motors
JLR's wholesale volumes grew 3.8% YoY and 1.5% MoM in December 2017 to 55,066 units (including China JV's 10,269 units). Jaguar volumes grew 6% YoY to 16,826 units against our estimate of 12,000 units due to lower XE sales. Land Rover (LR) volumes increased 2.8% YoY to 38,240 units against our estimate of 54,750 units, led by ramp-up of all-new Discovery and RR Velar. For 3QFY18, JLR wholesales grew 4.5% YoY to 159,067 units, led by 12.4% YoY growth in Land Rover sales while Jaguar sales fell 12.5% YoY to 42.4k units. JLR's retail volumes increased marginally by 0.6% YoY and 6.4% MoM to 55,697 units. The 4.1% YoY increase in LR volumes was partially offset by 7.8% YoY decline in Jaguar volumes. XF volumes grew 6.1% YoY. Jaguar XE volumes declined 35% YoY. F-Pace volumes remained flat YoY. Company started retails of E-Pace, with 454 units. LR's retail volumes increased by 4.1% YoY, mainly led by 71.1% rise in Discovery volumes, while RR Sport and RR Evoque volumes declined 37.5% and 12.5%, respectively. RR Velar clocked in 6,521 units. Region-wise, China reported strong volumes at 15,603k units (including China JV's 8,556 units), up 12.6% YoY. The growth in China is reflecting the introduction of the long wheelbase Jaguar XFL as well as strong sales of F-Pace, Discovery Sport, Range Rover Sport and Evoque. While retail sales were down in Europe (-4.6%), US (-9.2%) and UK (-15.8%), other markets witnessed volume growth of 19%. Mr Joe Eberhardt, President and CEO, Jaguar Land Rover North America, LLC said, "Jaguar Land Rover in the US achieved another record year for 2017, as our newest models broadened the appeal of both of our great brands.Outlook
The stock trades at 7.2x/6.6x FY19E/FY20E consolidated EPS. Maintain Buy with a target price of INR593 (December 2019E SOTP-based) for ordinary shares and INR414 for DVR (~30% discount to TP for ordinary shares).
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