Tata Motors Ltd. share price target

JLR-centric turnaround plan - Project Charge' was launched in October 2018 and aimed to deliver 2.5 billion of cost, profit and cash improvements by March 2020. Progress on the initiative has been stellar, with the company having over-achieved the target by 400 million three months ahead of schedule. JLR has now embarked on Project Charge+, which targets further 1.1 billion worth improvements in vehicle and market profitability, working capital, overheads and investment by FY21E. Pursuant to strong cost focus, FCF position has strengthened considerably as evidenced by 954, 559,...

10 December 2019 Automobiles JLRs wholesale volumes declined marginally by 2.4% YoY to ~48.1k units (our whereas Land Rover (LR) volumes increased ~9% YoY to ~37.3k units (our JLRs retail volumes declined 3.4% YoY in Nov19 as the recovery in China (+29%) and North America (~+5%) was offset by the fall in the UK (~-11%), Europe (~-17%) and RoW (~-17%). China witnessed the fifth consecutive month of a recovery in volumes. Jaguars retail volumes declined ~23% YoY in Nov19. LRs retail volumes were up 5.5% YoY, driven by higher sales of new RR Evoque (~+25%), new LR Discovery Sports (+4.4%), LR Discovery (+15.5%) and RR Sport (~+5%). Against the backdrop of a downturn in the global automotive market, we were pleased to see our sales grow in the US and China. Despite the ongoing headwinds in China, we continue to see green shoots of recovery in our sales there.

JLR has endured a turbulent operating environment over the last two 29 November 2019 years, led by a troika of adverse macro, product mix (due to pipeline favoring Jaguar) and market mix (due to the underperformance in China led by product quality issues, high inventory, high discounts and low dealer profitability). aforementioned challenges, particularly on product/market mix, are likely to ease based on product pipeline visibility and initiatives undertaken by JLR in China. JLRs product pipeline is dominated by LR, with four of the five new product launches over the next 2-3 years coming from the LR brand. In China, JLR has been focused on (a) reducing inventory (now at lowest levels since 2017), (b) improving dealer profitability and (c) brand-led pull strategy. JLRs cost-cutting initiatives under Project Charge have started reflecting in P&L;, with GBP0.5b of the targeted GBP1b of cost savings achieved till Sep19 and the balance GBP0.5b on track to be achieved in 2HFY20.

whereas Land Rover (LR) volumes were up ~5% YoY at 34.9k units (our JLRs retail volumes declined ~5.5% YoY in Oct19, as the recovery in China (+16%) was offset by the fall in the UK (-19%) and RoW (-11%). China witnessed the fourth consecutive month of a recovery in volumes. Jaguars retail volumes declined ~23% YoY, led by a decrease in sales for all models, except I-Pace. LRs retail volumes grew marginally by 2.4% YoY, driven by higher sales of new Evoque (+31%), LR Discovery Sports (+3%) and RR Sport (+7%). Land Rover year-on-year global growth continues; with the latest generation of our ever-popular luxury compact Range Rover Evoque now available in all regions. Sales of the comprehensively updated best-selling Land Rover Discovery Sport are ramping up well. The Range Rover Sport, also remains a key performer, with particularly strong sales in North America and China.

In Q2FY20 Tata Motors Limited (TML) posted consolidated revenue of Rs. 65,432 cr (down 9.2% YoY) on continued weaker sales volume. TML standalone revenue dropped by 44% YoY while revenue from Jaguar Land Rover (JLR) recorded decent growth of 7% YoY. Retail sales in china was the main driver of growth for JLR as it increased 24.3% YoY...

JLR's China volumes on the mend; Brexit muddies waters! JLR volumes have exhibited resilience in recent months, as a favourable base coincides with improvement in China business. Q2FY20 volumes at 1.35 lakh were up 3% YoY and 13% QoQ. Retail volumes (1.29 lakh units) were flattish on a yearly as well as sequential basis (China up 24% YoY, 8% QoQ). These prints represent tangible progress for JLR given the 15 consecutive months of contraction in overall Chinese auto industry volumes. However, prevailing uncertainty over Brexit negotiations would over the...

Strong Performance at JLR; Upgrade to BUY Tata Motors (TTMT) has delivered a stellar operating performance in 2QFY20 with sizable improvement in JLR's EBITDA margin despite challenging business environment for the global automobile industry. JLR's EBIDTA margin expanded by strong 485bps YoY and 960bps QoQ to 13.8%, supported by healthy product-mix and cost control measures. Consolidated revenue fell by 9% YoY (+7% QoQ) to Rs654bn (vs. our estimate of Rs689bn) on lower JLR volume and sharp deterioration in India business. Consolidated EBITDA rose by 8% YoY and 139% QoQ to Rs71.6bn (vs. our estimate of Rs51.2bn), while EBIDTA margin expanded by 174bps YoY and 607bps QoQ...

26 October 2019 strong, with the EBITDA margin at 13.8% (est. of 7.7%) one of the highest in four years. This reflects (a) a recovery in China and resilient US/EU, (b) a better mix, (c) Project Charge delivery, (d) lower D&A; and (e) favorable FX. PBT before EO stood at GBP166m (est. FCF was negative at GBP64m (v/s GBP623m in 2QFY19). business was impacted by inventory reduction, resulting in retails coming in higher by ~27k than wholesales in 2Q. India business disappointed with an EBITDA loss of ~INR1.7b (est. of +INR2.2b) due to write-off of ~INR2.33b in PV and operating deleverage.

Acceleration in Project Chage'savings drive JLR margin performance. TTMT's 2QFY20 results were better than expectations as JLR margins were at 13.8% (PLe: 8%) led by favorable mix, forex and project charge related cost savings. However, this was offset by a sharp decline in S/A profitability with EBITDA margins turning negative at 1.7% (18 quarter low, PLe: 5%) and loss of Rs13.4bn (PLe loss of Rs3.6bn)....

10 October 2019 Automobiles JLRs wholesale volumes were flat YoY (+34% MoM) at 53k units (our 4% YoY). JLRs retail volumes declined by ~0.5% YoY, as the recovery in China (+18% YoY) was offset by the decline in the UK (-6.5% YoY) and RoW (-13% YoY). China witnessed the third consecutive month of a recovery in volumes. Jaguars retail volumes declined ~15% YoY, led by a decrease in sales for all models, except I-Pace. LRs retail volumes grew ~7% YoY, driven by the ramp-up of new Evoque (+51%), RR (+11%) and RR Sport (+31%). Against challenging market headwinds, for the third consecutive month we have achieved double-digit growth in China, benefitting from our local turnaround plan and performing ahead of the broader market. Despite these negative market trends, Land Rover sales saw year-on-year growth in the quarter. A comprehensively updated and well-received new Discovery Sport will support this positive development in the months to come.