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TATA MOTORS: Below estimates; Volumes grew 21% YoY (flat MoM) to 64,757 units
- Total volumes grew by 21% YoY (flat MoM) to 64,757 units (v/s est 72,650 units), driven by strong growth in exports.
- Domestic CV portfolio grew by 12% YoY (~4.9% MoM decline) to 34,329 units. M&HCV’s volumes grew by 15% YoY (18% MoM decline) to 13,640 units, whereas LCV volumes grew by 11% YoY (8% MoM) to 20,689 units. Domestic CV volumes were expected to de-grow QoQ on account of BS-III implementation from Oct-10 and resultant pre-buying in Sep-10.
- Total CV volumes (incl exports) grew 20% YoY (~5.5% MoM) to 39,529 (v/s est 42,000 units). Our FY11 estimates factor in for volume growth of 26% for CVs.
- Domestic Car volumes grew by 20% YoY (~2.6% MoM), to 21,089 units, driven by 69% growth in Indigo range. Nano sales disappointed at 3,065 units (v/s 5,520 units in Sep-10 v/s 3,018 units in Oct-09). Our FY11 estimates factor in volume growth of 39% for passenger cars driven by ramp-up at Nano’s Sanand plant and strong demand for Indigo.
- Underlying demand remains strong, especially in CV segment due to higher freight availability as economic growth picks-up. The company has increased prices of CV’s by ~3% w.e.f Oct-10, which would help mitigate cost push for BSIII compliance. Also, they have raised price of Nano by Rs9,000 units from Nov-10.
- Our estimates factors in for 31% volume growth, implying residual monthly run rate of 86,403 units. The stock trades at 8.8x FY12E consolidated EPS of Rs131.8 and 14.4x FY12E normalized consolidated EPS (adj for R&D capitalization) to Rs80.3. Maintain Buy.
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