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Tata Motors reported strong volume growth of 21.3% yoy,
given domestic volume growth of 16% yoy, and strong
exports growth of 109% yoy. Total car sales grew 20.7%
yoy, Nano’s price has been increased by Rs9,000 to meet
the increase in input costs. We believe the stock is
attractive for multiple reasons: uptrend in CV cycle, rampup
in Nano and strong product pipeline. Reiterate
Outperform
CV, PC and UVs drive volumes. TTMT reported strong
volume growth of 21.3% yoy and flat mom to 64,757
units. Domestic volume growth of CVs and PVs was 16% yoy
to 58,807 units. YTD volume growth is 36% yoy to 444,873
units with estimated residual growth of 15.7%
growth of 19.4% yoy (-14% mom) to 15,610 units. Going
forward too, we expect good growth, given high GDP growth
expectations, government’s thrust on infrastructure, and normal
monsoons. Tata Motors should benefit the most from the CV
cycle uptrend, given its dominance in this industry. LCVs grew
strong 20.9% yoy and 11.1% mom to 24,062 units.
Strong PV performance. Car sales grew 20.7% yoy (+1%
mom) to 21,658 units. Of these, 3,065 were Nano (+2% yoy),
9,732 were Indica (1% yoy) and Indigo sales were 8,292 units
(+69% yoy). Domestic UV volumes were 3,389 units (+38%
yoy; 1% mom).
Pricing action in Nano. TM has increased Nano’s price by
Rs9, 000 effective from 1 Nov’10 to absorb the increase in
input costs
Exports reported robust 109%yoy growth. Exports
continued strong performance and registered 109%yoy and
18%mom growth to 5,950 units.
Valuation. The stock is currently trading at 8.7x FY12E
earnings. We believe Tata Motors is attractive for multiple
reasons – uptrend in CV cycle, ramp-up in Nano production
and strong product pipeline. Reiterate Outperform.
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