Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MHCV demand to remain muted in FY 12, LCV demand to provide support
In view of the macro headwinds impacting industrial output and slowing
of the economy, we believe MHCV demand will witness a mid single digit
growth in FY 12. However, we believe FY 13 will witness reversal in
the current trend in MHCV with strong infra plans in the pipeline.
Also consumption centric LCV demand will remain buoyant as this
segment is bucking the trend in CV industry. Tata Motors being the
market leader in both the businesses will be the single largest
beneficiary from the trend reversal in MHCV demand and continued
strength in LCV industry. We forecast MHCV/LCV volumes to grow at
7%/9% and 17%/13% in FY12E/FY13E respectively.
JLR demand to improve on a refreshed portfolio
Land Rover sales are expected to continue the dream run on the back of
the recent launch of Evoque,which has already amassed 20,000 booking
orders. Jaguar demand was impacted due to lack of smaller engine
offerings as the market moved towards<3l engines. With the July launch
of Jaguar XF 2.2l we believe the sharp fall observed in Jaguar in the
past few months would get mitigated. We expect JLR to post 9%/11.4%
growth in FY12E/FY13E at 0.265/0.295 mn units.
China, Russia and other developing economies to offset the Euro zone
underperformance
Geographically, US, UK and Euro zone will witness pressures
considering the economic instability, while China (36,000 units in FY
12E), Russia and other developing countries like Brazil, India, South
Africa etc will drive overall growth. We expect UK and Euro zone to
post negative growth in FY 12E, while posting lower single digit
growth in FY 13E. China (35%/25% in FY 12E/13E), Russia (50%/30% in FY
12E/13E) and ROW (35%/20% in FY12E/13E) countries will provide the
required impetus to volumes.
Margins to fall on both macro and micro issues in coming quarters, but
would improve in FY 13E
Higher ASPs in JLR business in China will mildly improve
profitability, although margins will witness pressure due to adverse
currency movement, annual RM contracts taken at higher prices,
incentives provided mainly in the US and higher R&D spend. In the
domestic passenger car business the company is rapidly losing market
share and pricing power due to which margins will witness pressure. In
FY 13E, as macro pressures ease with interest rates stabilizing, and
the company starts getting benefit of the easing RM costs and new
launches, we expect margins to improve. We factor in 11.3%/ 11.6%
EBITDA margins in FY 12E/13E.
Valuation
Tata Motors, we believe at current levels factors near term concerns.
We have valued the company on SOTP basis - Standalone business at 5.5x
times FY 13E EV/EBITDA at Rs86, JLR at 3x times FY 13E EV/EBITDA at
Rs110 and subsidiaries at Rs19, thus arriving at a target of Rs172, an
upside of 21% and rate the stock a BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MHCV demand to remain muted in FY 12, LCV demand to provide support
In view of the macro headwinds impacting industrial output and slowing
of the economy, we believe MHCV demand will witness a mid single digit
growth in FY 12. However, we believe FY 13 will witness reversal in
the current trend in MHCV with strong infra plans in the pipeline.
Also consumption centric LCV demand will remain buoyant as this
segment is bucking the trend in CV industry. Tata Motors being the
market leader in both the businesses will be the single largest
beneficiary from the trend reversal in MHCV demand and continued
strength in LCV industry. We forecast MHCV/LCV volumes to grow at
7%/9% and 17%/13% in FY12E/FY13E respectively.
JLR demand to improve on a refreshed portfolio
Land Rover sales are expected to continue the dream run on the back of
the recent launch of Evoque,which has already amassed 20,000 booking
orders. Jaguar demand was impacted due to lack of smaller engine
offerings as the market moved towards<3l engines. With the July launch
of Jaguar XF 2.2l we believe the sharp fall observed in Jaguar in the
past few months would get mitigated. We expect JLR to post 9%/11.4%
growth in FY12E/FY13E at 0.265/0.295 mn units.
China, Russia and other developing economies to offset the Euro zone
underperformance
Geographically, US, UK and Euro zone will witness pressures
considering the economic instability, while China (36,000 units in FY
12E), Russia and other developing countries like Brazil, India, South
Africa etc will drive overall growth. We expect UK and Euro zone to
post negative growth in FY 12E, while posting lower single digit
growth in FY 13E. China (35%/25% in FY 12E/13E), Russia (50%/30% in FY
12E/13E) and ROW (35%/20% in FY12E/13E) countries will provide the
required impetus to volumes.
Margins to fall on both macro and micro issues in coming quarters, but
would improve in FY 13E
Higher ASPs in JLR business in China will mildly improve
profitability, although margins will witness pressure due to adverse
currency movement, annual RM contracts taken at higher prices,
incentives provided mainly in the US and higher R&D spend. In the
domestic passenger car business the company is rapidly losing market
share and pricing power due to which margins will witness pressure. In
FY 13E, as macro pressures ease with interest rates stabilizing, and
the company starts getting benefit of the easing RM costs and new
launches, we expect margins to improve. We factor in 11.3%/ 11.6%
EBITDA margins in FY 12E/13E.
Valuation
Tata Motors, we believe at current levels factors near term concerns.
We have valued the company on SOTP basis - Standalone business at 5.5x
times FY 13E EV/EBITDA at Rs86, JLR at 3x times FY 13E EV/EBITDA at
Rs110 and subsidiaries at Rs19, thus arriving at a target of Rs172, an
upside of 21% and rate the stock a BUY.
No comments:
Post a Comment