JLR Aug sales lift Tata Motors to 19-month high, Citi ups target

JLR has reported solid growth in North America and Europe with retail sales rising 45 percent and 37 percent, respectively on yearly basis. Sales grew by 36 percent in China but fell 3 percent in the UK.

Jaguar sold 10,868 vehicles in August, up 104 percent over a year-ago period and 85,726 vehicles in 2016, up 72 percent YoY.

Land Rover also showed strongest August sales of 26,058 vehicles, up 9 percent YoY, which taking the total sales to 2,87,252 vehicles in 2016 (up 14 percent YoY).

With raising target price to Rs 665 (from Rs 530), Citi said it felt a combination of improving model cycle plus weak British pound should benefit JLR's margins and improve free cash flow generation over medium term.

The brokerage house valued JLR at Rs 479 per share, parent at Rs 107, JLR-Chery JV at Rs 50, other subsidiaries at Rs 24 and net automotive debt at negative Rs 5.

After correcting sharply during 2015, the stock has rebounded sharply, up 37 percent year-to-date but Citi said it thought there's still some steam left, given JLR's model momentum plus nascent recovery in parent business.

Meanwhile, Tata Motors yesterday said it had secured orders worth Rs 900 crore from state & city transport units in last 5 months.

"Order of 5,000 buses from state transport undertakings worth Rs 900 crore will be executive this year and 25 percent of the order are fully built-up buses, Ravi Pisharody, ED, commercial vehicle business said while addressing press conference today.

At 12:05 hours IST, the scrip of Tata Motors was quoting at Rs 590.50, up Rs 1.15, or 0.20 percent on the BSE.Posted by Sunil Shankar Matkar