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Tata Motors
Nov ’10 volumes: Cars disappoint, CVs impress; Buy
CVs, UVs drive volumes. Tata Motors reported subdued Nov
’10 volumes, with only 0.9% yoy growth (lower 15.7% mom) to
54,622 units, which was below expectations. Domestic volume
growth was 0.6% yoy, while exports grew 5.2% yoy.
M&HCVs register good growth. Domestic M&HCVs reported
17.6% volume growth yoy (and 7.8% mom), which is fairly good,
given that they are post-emission-norm-change volumes and that
the low-base of M&HCVs is now history.
LCVs sustain growth. Domestic LCVs sustained good volume
momentum, with 20.6% yoy growth (lower 1.5% mom).
PVs disappoint. While UVs did well domestically, with 39.5%
yoy growth, home car sales disappointed, declining 33.8% yoy and
42% mom. Of these, Nano sold just 509 units, Indica 5,716 units
(lower 37% yoy) and Indigo 6,009 units (up 1% yoy).
Outlook and valuation. Overall volume growth disappointed
mainly on account of lower passenger car sales in Nov ’10. The
stock trades at 10.3x FY11e and 9.4x FY12e EPS. We are positive
on the company and re-iterate a Buy. Risks are lower demand in
Europe and the US, increase in interest rates, decline in CV
demand, and unfavorable currency movements.
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