Tata Motors July 2011 volume: CV growth on track, PVs disappoint ::Standard Chartered Research,

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Tata Motors
July 2011 volume: CV growth on track, PVs disappoint


 Total sales for the month declined 6% yoy to 63,573
units primarily due to lower sales from the PV segment.
 While MHCV sales rose 4% yoy to 17,068 units, LCV
sales grew 24% yoy to 28,572 units.
 Total PV sales in July ’11 declined 37% yoy (-21% m-om) to 17,933 units.
 Valuation concerns seem to be overdone; Maintain
OUTPERFORM.

Lower PV sales hurt overall volume. Tata Motors’ total
sales declined 6% yoy to 63,573 units in July 2011 primarily
on account of lower offtake from the PV segment (down
41% yoy).  
CV sales up 16% yoy to 45,640 units. Total CV sales grew
16% yoy in July 2011 to 45,640 units driven by sustained
ramp-up of LCV sales. While MHCV sales were up 4% yoy
at 17,068 units, LCV sales were up 24% yoy at 28,572
units.      
PV sales down 37% yoy. Total PV sales in July 2011
declined 37% yoy (down 21% m-o-m) to 17,933 units. While
car sales declined 41% yoy, UV sales declined 2% yoy.
Nano sales failed to ramp up and were down 64% yoy at
3,260 units. While Indica sales declined 32% yoy to 5,860
units, Indigo sales declined 30% yoy to 4,877 units.
Valuation. The stock has witnessed selling pressure off-late
primarily on concerns of a slowdown in Europe (JLR’s key
market) as well as in India. However, we believe these
concerns are overdone with the CV volume for Tata Motors
growing at 17% yoy YTD FY12 and JLR volume growing at
9% yoy in 1Q. The stock is attractively valued at 6.8x
FY12E earnings and at 3.9x EV/EBITDA. Maintain
OUTPERFORM.