ICICIdirect.com's report on Tata Motors
Tata Motors’ (TML) Q4FY15 results were below Street estimates owing to below expectation JLR margins of 17.4%. Consolidated revenues stood at Rs 67576 crore (up 3.5% YoY, down 3.4% QoQ)
Reported EBITDA margins stood at 13.7% (down 281 bps YoY, 171 bps QoQ), below Street estimates. However, consolidated EBITDA was under-stated by ~Rs 1500 crore due to MTM losses on unrealised hedges. JLR margins came at 17.4%, below Street estimates, due to a decline in China’s volume share (18.9% in Q4FY15 vs. 23.7% in Q4FY14 and 26.7% in Q3FY15) due to transition issues for Evoque/ Discovery Sport. On the positive side, standalone EBITDA margins came in at 2.8% for Q4FY15 (after five quarters of negative margins) vs. estimates of negative margins for the quarter
Consequently, the reported consolidated PAT stood at Rs 1,716.5 crore, much lower than Street estimates on account of MTM losses on unrealised hedges & higher amortisation expenses (up 16% QoQ)
"JLR’s valuations are still subdued vis-à-vis cash-rich global peers like BMW. BMW has ~25% of its market capitalisation in cash (~€15 billion FY17E consensus) while vis-à-vis JLR it is only ~14% (implied JLR market capitalisation ~£18 billion) vis-à-vis ~£2.0 billion cash & cash equivalents in FY16E. We remain positive on sustained earnings growth for the JLR business as the product pipeline grows and market share increases across geographies. We value the stock on an SOTP basis, with JLR at 3.5x EV/EBIDTA basis contributing ~Rs 459/share while domestic business contributes Rs 41/share. Inclusive of other subsidiaries and China JV, we arrive at a target price to Rs 548. Buy the stock", says ICICIdirect.com research report.
For all recommendations, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
