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India Equity Research Reports, IPO and Stock News
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Tata Motors (TTMT)
Automobiles
JLR volumes rise sharply in August. JLR reported a 31% yoy increase in dealer
volumes in August 2011 aided by a 43% yoy increase in Land Rover volumes. Jaguar
volumes declined by 10% yoy. August numbers also included 1,750 units of Evoque
dispatches to dealers. Evoque has been launched in US, Europe and some parts of
China. Retail volumes of JLR remained under pressure in the developed markets but we
expect Evoque to support JLR’s volume growth. Maintain ADD rating.
Retail volumes remain under pressure in US and Europe for JLR
JLR US and European retail volumes continue to remain under pressure and declined by 9% and
12% yoy, respectively, while volumes (ex US and European sales) should have increased by 62%
yoy if we assume no inventory build-up in August. We believe 30% yoy growth is not sustainable
but expect 10% yoy volume growth in 2HFY12E driven by addition of Evoque volumes.
Luxury car demand for 4 major players (Audi, BMW, Mercedes and JLR) increased by 12% yoy in
August. JLR increased its market share by 140 bps mom. European volumes for these luxury car
players rose by 21% yoy in August aided by strong growth in the German market. US luxury car
market grew at a muted 5% yoy and China luxury car market growth moderated to 14% yoy in
August.
We maintain our ADD rating on the stock on attractive valuations
We maintain our ADD rating on the stock as we believe valuations are attractive despite our
expectations of 6% CAGR decline in consolidated earnings over FY2011-13E. The stock trades at a
5.1X EV/EBITDA on our consolidated EBITDA estimate for FY2013E (after deducting GBP450 mn of
capitalized R&D from EBITDA).
Our target price of Rs180 is based on sum-of-the-parts valuation methodology. We ascribe a 6.5X
EV/EBITDA multiple on our FY2013E standalone estimate and 4X EV/EBITDA multiple on our
FY2013E JLR estimate.
We believe JLR volumes are likely to report a 10% yoy growth in 2HFY12E driven by Evoque
volumes. While underlying retail sales trends are weak in developed markets, we expect Evoque to
boost volumes for JLR. We also factor in a 180 bps yoy decline in EBITDA margins in FY2012E
driven by increase in incentives, higher share of lower margin Evoque and higher raw material
costs (due to renewal of contracts with Ford for engines at a higher price), in our view.
JLR August volumes surprise positively
JLR reported a 31% yoy increase in dealer volumes in August 2011 aided by a 43% yoy
increase in Land Rover volumes. Jaguar volumes declined by 10% yoy. August numbers also
included 1,750 units of Evoque dispatches to dealers. Evoque has been launched in US,
Europe and some parts of China.
JLR US and European retail volumes continue to remain under pressure and declined by 9%
and 12% yoy, respectively, while volumes (ex US and European sales) should have increased
by 62% yoy if we assume no inventory build-up in August.
Luxury car demand for 4 major players (Audi, BMW, Mercedes and JLR) increased by 12%
yoy in August. JLR increased its market share by 140 bps mom. European volumes for these
luxury car players rose by 21% yoy in August aided by strong growth in the German market.
US luxury car market grew at a muted 5% yoy and China luxury car market growth
moderated to 14% yoy in August.
JLR volumes declined by 9% and 12% in US and European markets, respectively, indicating
JLR is losing market share in these markets while JLR’s China and rest of the world volumes
are rising at a rapid pace. JLR needs to grow its volumes by 10% yoy between September
and March 2011 to achieve our FY2012E estimates.
We believe JLR volumes are likely to report a 10% yoy growth in 2HFY12E driven by Evoque
volumes. While underlying retail sales trends are weak in developed markets, we expect
Evoque volumes to boost volume growth for JLR. We also factor in a 180 bps yoy decline in
EBITDA margins in FY2012E driven by increase in incentives, higher share of lower margin
Evoque and higher raw material costs (due to renewal of contracts with Ford for engines at
a higher price), in our view.
We maintain our ADD rating on the stock as we believe valuations are attractive despite our
expectations of 6% CAGR decline in consolidated earnings over FY2011-13E. The stock
trades at a 5.1X EV/EBITDA on our consolidated EBITDA estimate for FY2013E (after
deducting GBP450 mn of capitalized R&D from EBITDA).
Our target price of Rs180 is based on the sum-of-the-parts valuation methodology. We
ascribe a 6.5X EV/EBITDA multiple on our FY2013E standalone estimate and 4X EV/EBITDA
multiple on our FY2013E JLR estimate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Motors (TTMT)
Automobiles
JLR volumes rise sharply in August. JLR reported a 31% yoy increase in dealer
volumes in August 2011 aided by a 43% yoy increase in Land Rover volumes. Jaguar
volumes declined by 10% yoy. August numbers also included 1,750 units of Evoque
dispatches to dealers. Evoque has been launched in US, Europe and some parts of
China. Retail volumes of JLR remained under pressure in the developed markets but we
expect Evoque to support JLR’s volume growth. Maintain ADD rating.
Retail volumes remain under pressure in US and Europe for JLR
JLR US and European retail volumes continue to remain under pressure and declined by 9% and
12% yoy, respectively, while volumes (ex US and European sales) should have increased by 62%
yoy if we assume no inventory build-up in August. We believe 30% yoy growth is not sustainable
but expect 10% yoy volume growth in 2HFY12E driven by addition of Evoque volumes.
Luxury car demand for 4 major players (Audi, BMW, Mercedes and JLR) increased by 12% yoy in
August. JLR increased its market share by 140 bps mom. European volumes for these luxury car
players rose by 21% yoy in August aided by strong growth in the German market. US luxury car
market grew at a muted 5% yoy and China luxury car market growth moderated to 14% yoy in
August.
We maintain our ADD rating on the stock on attractive valuations
We maintain our ADD rating on the stock as we believe valuations are attractive despite our
expectations of 6% CAGR decline in consolidated earnings over FY2011-13E. The stock trades at a
5.1X EV/EBITDA on our consolidated EBITDA estimate for FY2013E (after deducting GBP450 mn of
capitalized R&D from EBITDA).
Our target price of Rs180 is based on sum-of-the-parts valuation methodology. We ascribe a 6.5X
EV/EBITDA multiple on our FY2013E standalone estimate and 4X EV/EBITDA multiple on our
FY2013E JLR estimate.
We believe JLR volumes are likely to report a 10% yoy growth in 2HFY12E driven by Evoque
volumes. While underlying retail sales trends are weak in developed markets, we expect Evoque to
boost volumes for JLR. We also factor in a 180 bps yoy decline in EBITDA margins in FY2012E
driven by increase in incentives, higher share of lower margin Evoque and higher raw material
costs (due to renewal of contracts with Ford for engines at a higher price), in our view.
JLR August volumes surprise positively
JLR reported a 31% yoy increase in dealer volumes in August 2011 aided by a 43% yoy
increase in Land Rover volumes. Jaguar volumes declined by 10% yoy. August numbers also
included 1,750 units of Evoque dispatches to dealers. Evoque has been launched in US,
Europe and some parts of China.
JLR US and European retail volumes continue to remain under pressure and declined by 9%
and 12% yoy, respectively, while volumes (ex US and European sales) should have increased
by 62% yoy if we assume no inventory build-up in August.
Luxury car demand for 4 major players (Audi, BMW, Mercedes and JLR) increased by 12%
yoy in August. JLR increased its market share by 140 bps mom. European volumes for these
luxury car players rose by 21% yoy in August aided by strong growth in the German market.
US luxury car market grew at a muted 5% yoy and China luxury car market growth
moderated to 14% yoy in August.
JLR volumes declined by 9% and 12% in US and European markets, respectively, indicating
JLR is losing market share in these markets while JLR’s China and rest of the world volumes
are rising at a rapid pace. JLR needs to grow its volumes by 10% yoy between September
and March 2011 to achieve our FY2012E estimates.
We believe JLR volumes are likely to report a 10% yoy growth in 2HFY12E driven by Evoque
volumes. While underlying retail sales trends are weak in developed markets, we expect
Evoque volumes to boost volume growth for JLR. We also factor in a 180 bps yoy decline in
EBITDA margins in FY2012E driven by increase in incentives, higher share of lower margin
Evoque and higher raw material costs (due to renewal of contracts with Ford for engines at
a higher price), in our view.
We maintain our ADD rating on the stock as we believe valuations are attractive despite our
expectations of 6% CAGR decline in consolidated earnings over FY2011-13E. The stock
trades at a 5.1X EV/EBITDA on our consolidated EBITDA estimate for FY2013E (after
deducting GBP450 mn of capitalized R&D from EBITDA).
Our target price of Rs180 is based on the sum-of-the-parts valuation methodology. We
ascribe a 6.5X EV/EBITDA multiple on our FY2013E standalone estimate and 4X EV/EBITDA
multiple on our FY2013E JLR estimate.
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