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Foreword
We have created this guidebook in order to educate investors and facilitate discussion about key products of Jaguar Land Rover and how they compare with other luxury OEMs. Product understanding is critical in the case of luxury OEMs as operating leverage is high and the success or failure of a single product can result in a big earnings swing. With the help of our US auto team, we have put together this product data book. The key highlights with regard to Jaguar Land Rover are:
1.
Promising Product Pipeline: JLR has an exciting line of new products, in particular, the Evoque, the launch of which is expected in May11. The Evoque, a 2litre SUV will mark JLR’s entry into the high growth small SUV segment. We note that BMW sells 100k units of its X1 in this segment and that, overall, X1 sales form about of 7% of global BMW sales. If the Evoque launch was a success than JLR might hope to achieve sales of 300k units in FY12, with 30k units coming from Evoque and the existing portfolio growing by 13%. This would lead us closer to our bull case price target of Rs1,536. We note that a 10% spike in volumes could lead to a 15% increase in F12 consolidated earnings.
2.
Land Rover Ranks High on the Model Hotness Index: Our model hotness index (based on incentives and volume growth) shows that Land Rover continues to do well compared to peers (Slide 9).
3.
Land Rover Lags on Fuel Efficiency: Though the Luxury SUV segment is less sensitive to oil prices we note that, within the SUV space, Land Rovers lags peers on fuel efficiency and the BMW X series scores high.
Remain OW on Tata Motors (TAMO.BO, Rs1,247.5): Overall we expect JLR to clock about 275k units in volumes in F12 and £1034mn in net profit. A successful launch of Evoque could lead to upside risk to earnings. Given its interesting line up of products and reasonable valuation (8.7x FY12e) earnings, we remain Overweight on Tata Motors
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Foreword
We have created this guidebook in order to educate investors and facilitate discussion about key products of Jaguar Land Rover and how they compare with other luxury OEMs. Product understanding is critical in the case of luxury OEMs as operating leverage is high and the success or failure of a single product can result in a big earnings swing. With the help of our US auto team, we have put together this product data book. The key highlights with regard to Jaguar Land Rover are:
1.
Promising Product Pipeline: JLR has an exciting line of new products, in particular, the Evoque, the launch of which is expected in May11. The Evoque, a 2litre SUV will mark JLR’s entry into the high growth small SUV segment. We note that BMW sells 100k units of its X1 in this segment and that, overall, X1 sales form about of 7% of global BMW sales. If the Evoque launch was a success than JLR might hope to achieve sales of 300k units in FY12, with 30k units coming from Evoque and the existing portfolio growing by 13%. This would lead us closer to our bull case price target of Rs1,536. We note that a 10% spike in volumes could lead to a 15% increase in F12 consolidated earnings.
2.
Land Rover Ranks High on the Model Hotness Index: Our model hotness index (based on incentives and volume growth) shows that Land Rover continues to do well compared to peers (Slide 9).
3.
Land Rover Lags on Fuel Efficiency: Though the Luxury SUV segment is less sensitive to oil prices we note that, within the SUV space, Land Rovers lags peers on fuel efficiency and the BMW X series scores high.
Remain OW on Tata Motors (TAMO.BO, Rs1,247.5): Overall we expect JLR to clock about 275k units in volumes in F12 and £1034mn in net profit. A successful launch of Evoque could lead to upside risk to earnings. Given its interesting line up of products and reasonable valuation (8.7x FY12e) earnings, we remain Overweight on Tata Motors
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