Tata Motors Limited - TATAMOTORS believe currency fluctuations (esp post Brexit) will disproportionately affect JLR’s earnings for some time. Adjusted for one-offs, insurance claims and forex, TTMT’s 1Q was slightly below expectation. JLR’s top-line at GBP 5.46bn (+9.1% YoY) was driven by higher net ASP (+3% QoQ) (owing to GBP depreciation). The 200 bps margin miss vs est (13.8%, adjusted for FX markdowns on Euro payables) owed to launch expenses of F-Pace, Evoque Convertible and XE in the US. The India business recorded margin improvement.

They believe JLR’s volume growth momentum will remain healthy given its strong new launch pipe. The India business is also recovering with cyclical CV revival and improving traction in PVs. However, luxury auto demand in UK/EU might weaken due to rising economic uncertainty while weaker GBP will result in translation losses at JLR. Given the improving profitability at Cherry (China JV), we have revised our SOTP for TTMT to Rs 533 (up 3% from Rs 524). Maintain BUY.