Buy Tata Motors Jan’11 volumes: CV base effect in play, UVs, exports impress; Anand Rathi

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Tata Motors
Jan’11 volumes: CV base effect in play, UVs, exports impress; Buy

For Jan ’10, Tata Motors reported good volume growth of 15.2%
yoy (and 11.8% mom) to 75,423 units, in line with expectations.
While domestic volumes grew 13.3% yoy, export growth was a
strong 51% yoy.

 High M&H CV base catches up. Domestic M&H CVs
reported 5% yoy volume growth, though mom it was 5.1% lower.
These are good figures but reflect the relatively higher base.
 Continued growth in LCVs. Domestic LCVs saw sustained
volume momentum, with 17.4% yoy growth (3.2% lower mom).
 PVs disappoint. While the domestic UV portfolio did well,
showing 26.1% yoy growth, the domestic car sales growth was
lower, at 13.4% yoy. Of these, Nano sales were 6,703 units (+68%
yoy), Indica, 10,591 units (8% lower yoy) and Indigo, 8,456 units
(+17% yoy).
 Valuation and risks. Overall volume growth was in line with
expectations, driven by good UV and export sales. We are positive
on Tata Motors and re-iterate our Buy on the stock. Risks: lower
JLR demand in Europe, the US and China; increase in interest
rates; decline in CV demand; and unfavorable currency
movements.