JP Morgan is overweight on the stock with a target price of Rs 485 on a recovering economic environment in India and believes JLR will continue to benefit from new model launches in the near term â€“ particularly at Jaguar.
Brokerage houses have maintained their bullish stance on Tata Motors, the owner of luxury car maker Jaguar Land Rover (JLR) that posted healthy growth in June retail sales led by new launches. The stock gained more than 2 percent intraday Friday.
JP Morgan is overweight on the stock with a target price of Rs 485 on a recovering economic environment in India and believes JLR will continue to benefit from new model launches in the near term – particularly at Jaguar.
Further, as JLR is a net exporter from the UK, the recent weakness in the GBP will enhance the competitiveness of its products in overseas markets and aid margins – this will likely offset near-term demand pressures in its home market (UK), says the brokerage that awaits clarity around negotiations on the possible tariff structures that could be levied with the European Union.
JLR's 80 percent of sales are outside the UK and US dollar denominated exports account for over 50 percent of sales. British pound fell around 10 percent against major currencies after the United Kingdom's vote to leave the European Union on June 23.
To derisk its business model, JLR is setting up a greenfield plant in Europe. It recently commissioned plants in China and Brazil.
JLR reported healthy retails in June, with sales growing 17 percent YoY, to 46,456 units largely supported by Jaguar sales that grew a whopping 84 percent YoY to 13171 units. Land Rover sales increased only 2.6 percent to 33,285 units due to decline in sales of RR and RR Sport. Growth was led by success of Jaguar XE, F Pace and Discovery Sport.
Growth was in all key geographies with China registering 19 percent, North America 44 percent and Europe 14 percent compared with same period last year.
Morgan Stanley also maintained overweight rating on the stock with a target price of Rs 476, saying Jaguar sales should remain strong as the company rolls out the new XF, XJ and F-Pace models globally.
The brokerage expects the Chinese JV's volumes to grow further in FY017, led by the rollout of long wheelbase XF.
With retaining buy rating and target price of Rs 527 on the stock, Nomura says it expects around 6,19,000 units wholesale sales in FY17, up 14 percent compared with FY16.
Macquarie consistently says Tata Motors is its top pick in the Indian auto sector and is a Macquarie Marquee recommended stock. It has maintained outperform rating with a target price of Rs 535.
At 10:22 hours IST, the scrip of Tata Motors was quoting at Rs 464.80, up Rs 9.55, or 2.10 percent on the Bombay Stock Exchange.
Posted by Sunil Shankar Matkar