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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● We assume coverage of Tata Motors with a NEUTRAL valuing at
SOTP based target price of Rs 799. Click here for full report.
● Starting with the launch of the Evoque in Sep-11, all brands are to
introduce new models in the next five years. With its model age
declining to 2.5 years by 2015, we have great confidence in LR’s
ability to grow volumes and expect JLR volumes to increase from
~243,000 units in FY11 to 290,000 units in FY13.
● Evoque launch will improve volumes from ~17,000 units to
>20,000 per month. However, we expect margins to continue to
decline going forward on adverse currency, higher incentives to
boost demand in developed markets and mix shift towards
Evoque. Expect consensus to downgrade numbers going forward.
● JLR trades at an implied valuation of 2.4x EV/EBITDA, which,
though cheap is far higher than BMW at 1.8x. Low multiples are a
reflection of concerns about sustainability of current high margins
in China, tougher emission norms forcing carmakers to raise
spends on power trains, reducing ability to generate cash.
Reiterate position of Two > Four, prefer Hero Motocorp in Autos.
Car business continues to drag domestic margins
With the investment cycle in India still not picking up, CV volumes are
likely to remain muted in FY12. However, given its dominant position
in CVs, we are not overtly worried about the segment. The passenger
car business, however, has been a big drag for Tata Motors as it has
borne the brunt of increased competition. Its share has declined from
~18% to ~11% in the last five years. The brand has taken a big
beating and all its three models – Nano, Indica and Indigo – are
witnessing double-digit declines. With competitive intensity in the
space expected to remain strong and with Tata Motors continuing to
invest in its car business, we reckon domestic margins will likely
remain muted.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● We assume coverage of Tata Motors with a NEUTRAL valuing at
SOTP based target price of Rs 799. Click here for full report.
● Starting with the launch of the Evoque in Sep-11, all brands are to
introduce new models in the next five years. With its model age
declining to 2.5 years by 2015, we have great confidence in LR’s
ability to grow volumes and expect JLR volumes to increase from
~243,000 units in FY11 to 290,000 units in FY13.
● Evoque launch will improve volumes from ~17,000 units to
>20,000 per month. However, we expect margins to continue to
decline going forward on adverse currency, higher incentives to
boost demand in developed markets and mix shift towards
Evoque. Expect consensus to downgrade numbers going forward.
● JLR trades at an implied valuation of 2.4x EV/EBITDA, which,
though cheap is far higher than BMW at 1.8x. Low multiples are a
reflection of concerns about sustainability of current high margins
in China, tougher emission norms forcing carmakers to raise
spends on power trains, reducing ability to generate cash.
Reiterate position of Two > Four, prefer Hero Motocorp in Autos.
Car business continues to drag domestic margins
With the investment cycle in India still not picking up, CV volumes are
likely to remain muted in FY12. However, given its dominant position
in CVs, we are not overtly worried about the segment. The passenger
car business, however, has been a big drag for Tata Motors as it has
borne the brunt of increased competition. Its share has declined from
~18% to ~11% in the last five years. The brand has taken a big
beating and all its three models – Nano, Indica and Indigo – are
witnessing double-digit declines. With competitive intensity in the
space expected to remain strong and with Tata Motors continuing to
invest in its car business, we reckon domestic margins will likely
remain muted.
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