As Tata Motors posts good sales, analysts remain upbeat on stock

Tata Motors-owned Jaguar Land Rover (JLR) reported its best-ever retail sales for February at 40,978 vehicles, up 9.3 pe cent from the same month last year. The strong performance was driven by strong sales of the Jaguar F-PACE, the XE, the Land Rover Discovery Sport, the Range Rover and the Evoque, with sales of the all-new Land Rover Discovery now also under way, the company said in a statement. The Jaguar brand recorded retail sales of 12,203 units in February, up 81.1 per cent, driven by the ongoing success of the Jaguar F-PACE as well as strong sales of the XE.Analysts are positive about the stock following the figures and have largely maintained their buy rating. JP Morgan is overweight on the stock with a target price of Rs 570. The research firm feels that JLR’s sales mix should improve with a pick-up in Land Rover sales on the back of five new launches. “Fall in Land Rover volumes continued for the fifth straight month. Hence, we estimate margin mix to be slightly negative on this account. The decline is largely led by Discovery ahead of the new versions launch in February 2017,” it said in a report. Karvy has reiterated its buy call on the stock with a target price of Rs 535 a share. The brokerage house cited spectacular growth in the UK, North America and China for February. “We expect JLR to continue its positive momentum across the markets on the back of success of new launches at regular interval. On SOTP basis, we value Company’s standalone business at Rs. 103 (7x FY19E EBIDTA),” it said in its report.Kotak Institutional Equities has maintained its buy call on the stock with a target price of Rs 550. The research firm expects volume growth momentum to improve over the next few months with beginning of sales of new Discovery and continued strong growth in China. “The company will also launch a new mid-sized Range Rover Velar in 2HCY17 which should drive double-digit volume growth for the company in FY2018E. Overall, we expect JLR to deliver 11% volume CAGR over FY2017-19E. JLR’s EBITDA margin will likely improve in FY2018E led by currency benefits, operating leverage and benefits from platform consolidation,” the firm wrote in its research report. Meanwhile, Nomura has also maintained its buy call on the stock with a target price of Rs 563, implying a 19 percent upside. “Range Rover Sport declined 3 percent overall, with Discovery Sport ramping up and the launch of RR Velar (Strong potential for new Range Rover Velar), we expect the company to deliver a 12% volume CAGR over FY17-19F,” the brokerage house said in its report.