Tata Motors- Positive surprises to continue, Retain BUY, prefer DVR :: Emkay

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Tata Motors

Positive surprises to continue, Retain BUY, prefer DVR

BUY

CMP: Rs 1,144                                       Target Price: Rs 1,520

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n     Demand outlook remains strong across segments. Expect 10% to 15% growth in M&HCV trucks (our est is 9%), <10% growth in buses and 20% volume growth in LCVs in FY12

n     LR continues to drive profits at JLR. However, Jaguar has also started contributing to profits. Profitability will improve with higher share of new models in sales

n     Benefits of low hanging fruits almost exploited at JLR but there are adequate levers both short term and long term that should provide cushion to margins

n     Retain our FY12 EPS of Rs 166, Maintain BUY with a TP of Rs1,520. Prefer DVR as it is at steep disc. of 45% to ordinary shares, trades at 1.3x FY12 P/B offers 4.8% div. yield (FY11E)