Buy Tata Motors; target of Rs 319: Angel Broking

Angel Broking is bullish on Tata Motors and has recommended buy rating on the stock with a target of Rs 319 in its November 19, 2012 research report.

“Tata Motors, for October 2012, Jaguar and Land Rover (JLR) posted in-line wholesale volume growth of 6.6% yoy (5.4% mom) to 27,897 units. While Jaguar sales declined 36.2% yoy (up 18.9% mom) primarily due to the impact of the hurricane Sandy in the USA; Land Rover sales registered a strong growth of 17.4% yoy (3.8% mom) backed by strong growth in Evoque, Freelander and Defender sales. Land Rover sales benefitted from the start of the third shift at the Halewood plant which eased the production constraints for Evoque (~9,500 units during the month) and Freelander models.”

“JLR reported a healthy retail volume growth of 10.1% yoy to 25,176 units. The volumes are not comparable on a mom basis as September tends to be exceptionally strong given change in number plates in UK. The growth was driven solely by Land Rover which registered a strong growth of 17.1% yoy to 22,166 units driven by 61.1% and 39.4% yoy growth in Evoque and Freelander sales. In terms of geography, China was the primary driver of growth as volumes surged 68.1% yoy; however, US sales declined 19.2% yoy primarily due to the impact of hurricane Sandy. Jaguar sales posted a decline of 23.6% yoy to 3,010 units as introduction of the 2013 model year products later in the year impacted the sales across geographies.”

“We retain our positive view on JLR and expect a 12% volume CAGR over FY2012-14E driven by Evoque and new product launches (Range Rover, Range Rover Sport, Jaguar XF Sportbrake and all-wheel drive and smaller engine options in the XF and XJ models). Further, favorable market and product-mix and stable commodity prices will help mitigate raw-material cost pressures. We maintain our buy rating on Tata Motors with a sum-of-the-parts (SOTP) target price of Rs 319,” says Angel Broking research report. 

Public holding more than 90% in Indian cos

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