Buy Tata Motors; target of Rs 344: PLilladher
Prabhudas Lilladher is bullish on Tata Motors and has recommended 'Buy' rating on the stock with a price target of Rs 344 in its May 30, 2013 research report.
June 04, 2013 / 16:03 IST
Prabhudas Lilladher's research report on Tata Motors
"Tata Motors' Q4FY13 results were above estimates, mainly on account healthy operating performance both at the standalone as well as JLR business. Standalone business reported an EBITDA margin of 3.6 percent (Ahead of PLe-1.9 percent) on account of lower raw material cost and better product mix QoQ . On the other hand, 18.7 percent volume growth coupled with richer product mix as well as better region mix (China accounted for ~21.1 percent vs 19.0 percent YoY) led to a positive surprise at EBITDA margin for JLR which improved 320bps YoY to 17.8 percent (PLe-16.3 percent). Management is optimistic about the new launches at JLR including the recently launched 'Range Rover', and to be launched Jaguar F-Type and New Range Rover Sport and indicated strong demand for the same. With volume improvement on account of new launches and favourable product mix as well as geographical mix, we expect margins at JLR to remain healthy at 15-17 percent range.""The stock is currently trading at 8.2x FY14E EPS and 6.9x FY15E EPS. However, adjusting for R&D expense, the valuation stands at 9.7x FY14E and 8.3x FY15E. This seems fair compared to global peers’ average P/E of 8-9.0x FY14E earnings. On account of ~13.2 percent potential upside from the current levels, we reiterate buy with a SOTP-based TP of Rs 344," says Prabhudas Lilladher research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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