Tata Motors: What analysts make of Q4 performance

Moneycontrol Bureau

Tata Motors shares were up 3 percent to Rs 313 in morning trade after reporting better-than-expected fourth quarter numbers Wednesday evening.

A snapshot of how analysts view the performance:

Jefferies      Rating: Hold      Target: Rs 326

JLR’s near-term outlook remains strong on both volumes and margins though experience from last few quarters argues against extrapolation. While we like JLR’s strategy, our concern on lack of cash flows remains unchanged and so does our view that the stock is fairly priced.

Morgan Stanley     Rating: Overweight

Quarterly volatility in the business will likely continue, as volumes ahead of the Range Rover Sport launch could be weak, but on a full-year basis, Tata Motors is set to have a strong year. China luxury slowdown is a key downside risk.

JM Financial   Rating: Buy       Target: Rs 342

Volatility in Tata Motors share price would continue to stay high going forward due to variation in profitability. While the product pipeline of JLR appears impressive, aggressive investment plans of the company would keep the earnings growth in check going forward.

Goldman Sachs    Rating: Buy  Target: Rs 361

We believe Tata Motors' FY13 results strongly underscore the profit and cash flow generation potential of JLR. After recent investor concerns over JLR’s margins and cash flow generation profile, we believe JLR's product innovations will drive an earnings upgrade cycle for Tata Motors stock over the next 12 months

IDFC               Rating:  Sell   Target : Rs 270

We remain sellers of the stock notwithstanding the 4Q beat because; a) sustainable free cash flow at JLR remains elusive, b) Chinese demand is moderating, and c) we see further deterioration in standalone performance. Even as we cut earnings we raise our target price to Rs270 from Rs 254.

Emkay Global   Rating: Accumulate   Target: Rs 340

Recent performance warrants a slight upgrade in our estimates for JLR as healthy volume/mix momentum is likely to continue on the back of the new launches. We have raised our volume estimates for JLR by 2-5 percent to 428k/493k units and our margin estimates by around 50 bps each to 15.5 percent for FY14/FY15.

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