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Key Takeaways
New Land Rover Evoque to drive JLR volumes in FY12
It expects volumes to grow significantly from FY11 levels of 243,000, driven by the
launch Evoque and MY12XF, and doubling of volumes in China.
It has received favorable response for Evoque (to be launched in September 2011)
with over 1,50,000 enquiries and 20,000 pre-orders. It expects Evoque volumes of
70,000-80,000 in the first full year of launch.
Jaguar volumes are likely to pick up, led by the launch of refreshed XJ for China, the
impending launch of MY12XF (US in September 2011).
This coupled with easing of capacity constraint should help product mix to normalize
in favor of Jaguar (to 30:70 - J:LR v/s 10:90 in 2HFY11).
EBIT margin at JLR to remain under pressure at 1QFY12 levels
The management expects EBIT margin at JLR to remain under pressure at 1QFY12
levels, impacted by (a) commodity cost stabilizing at higher levels, (b) adverse
forex movement, (c) higher promotional cost on account of Evoque and MY12
launches, and (d) higher depreciation and amortization due to Evoque launch.
Internal cost efficiency and better market mix would partly dilute cost push.
Maintains CV volume growth of 14-15% in FY12; margins to improve
The management expects the domestic CV business to grow 14-15% in FY12, with
7-10% growth in M&HCVs and 18-20% growth in LCVs. While FY12 YTD growth is
~14%, it expects 2HFY12 growth to be higher due to seasonality and heavy 1HFY11
due to BS-III implementation in 2HFY11. It is not witnessing any meaningful impact
of increase in interest rates, as availability of finance continues to be good.
For PVs, it expects FY12 volumes to be flat, despite ~25% decline in FY12YTD,
driven by pick-up in Nano and UV volumes (Aria variants, new Safari and Venture).
It expects standalone margins to improve from 8.4% in 1QFY12, driven by (a)
reduction in steel cost by INR1/kg from September 2011 and in other commodity
cost, and (b) expected pick-up in loss-making PV business.
Other takeaways
JLR inventory is under control (including dealer-level inventory) at ~70 days (v/s
135 days during the credit crisis and 80-90 days in FY11).
For JLR, it has a strategy to launch at least two products per platform. Evoque is
based on the Freelander platform.
The management maintains capex plan of ~GBP1.5b per year for JLR for the next
few years. However, if volumes come under pressure, it would reduce capex to
~GBP800m for investment in critical projects.
The company's 1QFY12 EBITDA margin was impacted by ~100bp due to VAT-related
changes in Maharashtra. It expects some resolution of the issue based on the
dialogues of the industry with the state government.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
New Land Rover Evoque to drive JLR volumes in FY12
It expects volumes to grow significantly from FY11 levels of 243,000, driven by the
launch Evoque and MY12XF, and doubling of volumes in China.
It has received favorable response for Evoque (to be launched in September 2011)
with over 1,50,000 enquiries and 20,000 pre-orders. It expects Evoque volumes of
70,000-80,000 in the first full year of launch.
Jaguar volumes are likely to pick up, led by the launch of refreshed XJ for China, the
impending launch of MY12XF (US in September 2011).
This coupled with easing of capacity constraint should help product mix to normalize
in favor of Jaguar (to 30:70 - J:LR v/s 10:90 in 2HFY11).
EBIT margin at JLR to remain under pressure at 1QFY12 levels
The management expects EBIT margin at JLR to remain under pressure at 1QFY12
levels, impacted by (a) commodity cost stabilizing at higher levels, (b) adverse
forex movement, (c) higher promotional cost on account of Evoque and MY12
launches, and (d) higher depreciation and amortization due to Evoque launch.
Internal cost efficiency and better market mix would partly dilute cost push.
Maintains CV volume growth of 14-15% in FY12; margins to improve
The management expects the domestic CV business to grow 14-15% in FY12, with
7-10% growth in M&HCVs and 18-20% growth in LCVs. While FY12 YTD growth is
~14%, it expects 2HFY12 growth to be higher due to seasonality and heavy 1HFY11
due to BS-III implementation in 2HFY11. It is not witnessing any meaningful impact
of increase in interest rates, as availability of finance continues to be good.
For PVs, it expects FY12 volumes to be flat, despite ~25% decline in FY12YTD,
driven by pick-up in Nano and UV volumes (Aria variants, new Safari and Venture).
It expects standalone margins to improve from 8.4% in 1QFY12, driven by (a)
reduction in steel cost by INR1/kg from September 2011 and in other commodity
cost, and (b) expected pick-up in loss-making PV business.
Other takeaways
JLR inventory is under control (including dealer-level inventory) at ~70 days (v/s
135 days during the credit crisis and 80-90 days in FY11).
For JLR, it has a strategy to launch at least two products per platform. Evoque is
based on the Freelander platform.
The management maintains capex plan of ~GBP1.5b per year for JLR for the next
few years. However, if volumes come under pressure, it would reduce capex to
~GBP800m for investment in critical projects.
The company's 1QFY12 EBITDA margin was impacted by ~100bp due to VAT-related
changes in Maharashtra. It expects some resolution of the issue based on the
dialogues of the industry with the state government.
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