Moneycontrol Bureau
Tata Motors shares rallied more than 22 percent in last 11 out of 12 sessions, driven by strong Jaguar Land Rover & better-than-expected commercial vehicle sales data in May and likely above normal monsoon. The stock touched fresh 52-week high of Rs 468.70, up 1.3 percent intraday Wednesday.
Brokerages have maintained their overweight rating on the stock after JLR retail sales data, saying F-Pace will be key driver for overall sales growth in FY17 along with other new launches and China growth is likely to be aided by Discovery Sport & XF.
With retaining overweight rating and target price of Rs 476, Morgan Stanley feels Jaguar sales should remain strong as the company rolls out the new XF, XJ and F-Pace globally. It expects the Chinese JV's volumes to grow further in FY17, led by the rollout of long wheelbase XF.
JP Morgan too has maintained overweight rating on the stock with a target price of Rs 485, driven by a refreshed product portfolio at JLR coupled with an improving environment in the local India business.
JLR's retail sales grew by 18 percent in May compared to year-ago period, which was faster than a 11 percent YoY growth recorded in April.
Jaguar sales were up 90 percent in May against 49 percent YoY growth in April, largely driven by the start of F-Pace and XE sales in the US.
"There is order backlog of up to nine months for F-Pace in some markets," Macquarie said.
The brokerage continued to say Tata Motors is its top pick in the Indian auto sector and is a Macquarie Marquee recommended stock. The brokerage has maintained outperform rating with 12-month target price of Rs 535.
The customer deliveries of Jaguar F-Pace started in April 2016. "This will be followed by the launch of the new Discovery in Q3FY17 and a new mid size Range Rover model (L560) in Q4FY17. We expect Jaguar E-Pace compact SUV and the new XJ sedan to be launched in 2HFY18. Jaguar is also likely to introduce an electric SUV I-Pace in 2017," Macquarie said.
It expects JLR volume CAGR of 18 percent over FY16-18, which will be driven by the continued growth in premium SUV demand, increase in the addressable market through new model launches and geographical/network expansion.
Land Rover sales increased 6 percent YoY during the month against 4 percent growth in preceding month, impacted by decline in sales of RR and RR Sport but supported by Discovery Sport that continued to show strong growth momentum with 77 percent surge in May sales.
May sales growth in China was 26 percent against 10 percent YoY in previous month, driven by Chery JLR JV. Volumes grew 24 percent in Europe, 23 percent in UK, 8 percent in US and over 6 percent in other markets compared to year-ago period.
JP Morgan said JLR is broad basing its production base and is setting up a new plant with a capacity of 150,000 units in Europe to cater to demand from this region. The plant will be commissioned in 2018. Currently, JLR derives around 20 percent of its sales from continental Europe while imports from the region are around 35 percent.
At 11:01 hours IST, the scrip of Tata Motors was quoting at Rs 465.65, up Rs 2.60, or 0.56 percent on BSE.Posted by Sunil Shankar Matkar
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