M&H CVs, PCs and UVs drive volume – Tata Motors reported
strong 23.1% yoy (down 1.9% mom) volume growth in Sep ’10
to 64,668 units (in line with our expectations). Domestic volume
grew 19.7% yoy, while exports grew 77% yoy.
M&H CV continues its strong performance – Domestic M&H
CV reported volume growth of 28% yoy (12% mom). Given
good FY11 GDP growth expectation, the government’s thrust
on infrastructure and normal monsoons, we expect the CV
segment to post good growth in coming quarters. Given Tata
Motors’ dominant position in the CV industry, we expect it to
benefit the most from this upturn.
Strong performance by PVs – Domestic car sales grew 29.4%
yoy (down 7.8% mom) to 20,561 units. Of these, 5,520 were
Nanos (+61% yoy), 6,258 were Indicas (-37% yoy), while Indigo
sales were 8,783 units (+248% yoy). Domestic UV volume was
3,340 units (+40% yoy; 15.8% mom). Domestic LCVs grew 3%
yoy and declined 7.8% mom.
Price increases – Tata Motors increased the prices of the
Indica and Indigo ranges by around Rs4,500 to Rs14,000,
depending on the model. In the UV segment, the prices of the
Sumo and Grande MK II were increased by around Rs7,800 to
Rs10,300, mainly because of higher input costs. For CVs,
prices were increased by around Rs5,000 to Rs40,000 to reflect
higher input costs and costs associated with upgrading the
products to meet BSIII emission norms.
Valuation – Tata Motors is attractive for multiple reasons –
uptrend in CV cycle, Nano production ramp up, strong product
pipeline and re-rating of JLR. Maintain Outperform.
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