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Last Updated : Dec 04, 2019 11:41 AM IST | Source: Moneycontrol.com

Tata Motors share price rallies 6% as double-digit growth in Land Rover lifts US sales

Land Rover sales in the United States grew by 11.3 percent to 9,514 units, though Jaguar sales dropped 7.5 percent to 2,958 units in November compared to the same period last year.

 
 
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Tata Motors share price gained 6 percent intraday on December 4 after a double-digit growth in Land Rover lifted overall sales in the United States.

In November, Tata Motors' subsidiary and UK-based luxury carmaker Jaguar Land Rover (JLR) sold 12,472 units in the US, an increase of 6.2 percent year-on-year.

It sold 11,744 units in the US during November 2018. On month-on-month basis, sales increased by 19.4 percent.

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Land Rover sales grew by 11.3 percent to 9,514 units, though Jaguar sales dropped 7.5 percent to 2,958 units compared to the same month last year.

In fact, overall US sales rose for the fourth consecutive month. Its sales in October stood at 10,443 units against 9,490 units in September, 8,700 units in August and 8,476 units in July.

JLR has endured a turbulent operating environment over the last two years, led by adverse macro, product mix (due to pipeline favouring Jaguar) and market mix (due to the underperformance in China led by product quality issues, high inventory, high discounts and low dealer profitability).

Some of these challenges, particularly on product and market mix, are likely to ease based on product pipeline visibility and initiatives undertaken by JLR in China, said Motilal Oswal. The brokerage has a buy call on the stock with a target of Rs 195, implying 23 percent potential upside from current levels.

JLR's product pipeline is dominated by Land Rover, with four of the five new product launches over the next 2-3 years coming from the Land Rover brand.

"Land Rover's contribution is already improving since Q2FY20. In China, JLR has been focused on (a) reducing inventory (now at lowest levels since 2017), (b) improving dealer profitability and (c) brand-led pull strategy. JLR has been outperforming its peers in China since Jul'19," the brokerage said.

JLR's cost-cutting initiatives under 'Project Charge' have started reflecting in P&L, with 0.5 billion pound of the targeted 1 billion pound of cost savings achieved till September 2019 and the balance 0.5 billion pound on track to be achieved in second half of FY20, it added.

On the other hand, India business appears to have bottomed out in Q2FY20, although a full-blown recovery may be a few quarters away, Motilal Oswal said.

The stock was quoting at Rs 167.10, up Rs 8.95, or 5.66 percent on the BSE, at 1057 hours. In the last three months, the stock has surged 48 percent.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Dec 4, 2019 11:41 am
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