Buy Tata Motors; target of Rs 580: Religare Capital

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26 Aug, 2025 12:21

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Religare Capital`s research report on Tata MotorsJLR’s wholesale volumes for August grew only 2.4% YoY to 31,650 units, while retail growth also was moderate at 9% to 30,249 units. Land Rover volumes continued to drive growth even as Jaguar volumes were muted. Region-wise, China/the Asia Pacific posted the strongest growth of 25%/ 24%, while NA turned negative. Despite below-estimated August volumes, we maintain our FY15/FY16 estimates at 15%/14% YoY and restate BUY on TTMT with a Sep’15 TP of Rs 580 on (a) a growing China market, (b) planned capacity additions and (c) contribution from new launches. JLR’s wholesale volume growth muted in August: JLR’s August wholesale volumes grew only 2.4% YoY to 31,650 units (vs. 33,500-34,000 estimated). While Jaguar volumes fell sharply to 4,658 units (-11% YoY, -37% MoM), Land Rover volumes improved YoY to 26,992 units (5% YoY, -16% MoM). The YTD tally stands at 186,273 units (+19% YoY) – still ahead of the targeted +15% YoY. Retail growth also moderate at 9% YoY: JLR’s retail growth in August remained modest at 9% YoY (+8% in July, +17% YTD) to 30,249 units, led by a 12% growth in Land Rover (+19% YTD) even as Jaguar sales dipped 6% (+6% YTD, base of +92%). Retail growth of 45%/63% for the new Range Rover/Range Rover Sport continued to outperform other carlines. Volumes for Defender/Freelander grew by 19%/4%, while Evoque/Discovery sales slid ~3%/18%. For Jaguar carlines, F-Type continued to grow YoY (albeit only a marginal 1% in August) whereas XF/XJ sales dipped by another 10%/8% YoY. Region-wise, while China and the Asia Pacific posted the strongest growth of ~25% YoY, growth turned negative (-12%) in North America (first time in the recent past). Europe/UK reported 21%/9% growth. View: While August wholesale volumes missed estimates, we maintain our FY15/FY16 volume growth estimates at 15%/14% owing to growing strength in the China market, planned capacity additions and contribution from new launches over the next two years. We see a volume pick-up in Q4FY15 as deliveries of the recently-launched Jaguar XE (high-volume segment) and Discovery Sports (replacing Freelander) begin. Further, local manufacturing (and expanding dealership) in China and easing of capacity constraints in the UK should aid volumes. Maintain BUY on TTMT with Sep’15 TP of Rs 580.

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