Tata Motors Ltd. share price target

10 July 2018 Automobiles JLRs wholesale volumes declined 24% YoY (-20.5% MoM) to 37.5k units (est. of 50k units; includes China JV volume of 7.6k units) in June 2018. Jaguar volumes declined 16.9% YoY to 10.4k units (est. of 15.5k units), while Land Rover volumes fell 26.6% YoY to 27.1k units (est.

ICICI Securities Ltd | Retail Equity Research Tata Motors owned Jaguar & Land Rover (JLR) at its recently held Investor Day, highlighted its business challenges & strategies for the way forward. JLR has laid down its strategy that focuses on 1) increasing its offering of advance driver-assistance system (ADAS) that is shaping up the industry; 2) to launch four new models thereby taking total nameplate to 16 by FY24E; 3) focus on cost (via engineering capabilities, globalise sourcing & managing SG&A;) and; 4) improving the financial performance...

Pace UK supplies will start from next week, as it was training its dealer network for EV launch. It has order book of 6 months, with launch in other markets in coming months. Also, recently launched RR/RR Sport PHEV has got better than expected response, leading to supply side constraints. As a result,it is yet to be launched outside UK and EU. MLA platform is scalable architecture utilizing efficiently modular commonalities. It is agnostic top ropulsion systems. Given uncertainty around inflection point for EVs, it is banking on flexibility offered by MLA's platform to offer ICE, MHEV, PHEV and BEV on same flexible architecture. Every product launched after 2020 will be based on this MLA architecture, and offer some form of electrification. Full rollout of MLA platform will complete by 2025

Standalone revenue registered 45% YoY growth in Q4FY18 driven by stellar 34% and 35% YoY growth in commercial vehicles (CV's) and passenger vehicle (PV's), respectively while the balance growth came from mix improvement. In FY18, the company has managed to arrest market share loss in CV's after seven consecutive years of decline with domestic market share in CV's increasing to 45.1% (+0.7% YoY). Growth in PV's was largely driven by new launches (Tiago, Tigor, Hexa & Nexon). JLR revenue grew by 3.9% YoY owing to 2.2% increase in volumes and 1.5% increase in realization. New launches/refreshes (Velar, Discovery) continue to witness good traction. Geographically, strong volume growth in...

Automobiles JLRs wholesale volumes grew 3.5% YoY (16.4% MoM) to 48.8k units (including China JVs 7k units) in May 2018. Jaguar volumes grew 21.1% YoY to 15.3k units (in-line) while Land Rover volumes declined 2.9% YoY to 33.5k units (in-line). JLRs retail volumes increased 6.1% YoY (6.9% MoM) to 48.3k units, as Jaguar retails grew 6.6% YoY (9.2% MoM) to 14.

Turnaround 2.0 is focused on delivering competitive, consistent and cash- accretive growth by a) winning customers and markets, b) building a profitable, fit-for-future product portfolio and c) driving operational efficiency and capital productivity. TTMT expects continued momentum in its domestic CV business after exhibiting a healthy progress in FY18. TTMT is aiming for Winning decisively in the CV segment by a) strengthening product planning to address white space, b) leading in technology, c) developing products via modular platforms and d) enhancing customer engagement. Its objective is to deliver sustainable and profitable growth for customers by providing solutions to their pain points. This, coupled with a continuous focus on optimizing cost and capex, would facilitate a turnaround in the PV business. While it wouldnt shy away from investing in business, it is focused on improving productivity of capex. Two areas where it is targeting to optimize capex are a) low-cost capacity addition (debottlenecking and brownfield) and b) modularity of platform.

31 May 2018 Automobiles We assess liquidation value at ~INR256/share or ~10% downside from current level. This is after considering the intangible assets of JLR and India business at 35% of book value (based on 35% capitalization rate v/s JLRs 80%). While stocks have traded below their liquidation values in the past, barring any global macro events, we do not see TTMT sustaining at such levels for a long time. At ~INR256/share, TTMT would be valued at ~0.9x FY18 P/B, which is close to its floor P/B valuation of 0.9x in the last 10 years. Interestingly, even during the Global Financial Crisis (GFC) and worst financials ever for JLR (EBIT margin of -6.5% in FY09), similar health of India financials (EBITDA margins at 6.7% in FY09) and negative CFO, the bottom valuation for TTMT was at 0.9x in 3QFY09. Coincidentally, JLRs peers BMW (0.98x) and Daimler's (0.76x) bottom valuations are also around ~0.87x P/B (ex GFC).

The fall in bottom line was primarily due to a Rs 1,641.38 crore impairment of capital work in progress. The company registered drop in margins during the quarter. Operating profit margin on a consolidated basis for the quarter endedMar 18 fell 210 bps to 11.9% (vis a vis 14%).The drop inmargin was due to rise in other and raw material expenses (net of sales, stock adjusted). Raw material cost increased by 130 bps to 56.5%. Other expenses rose 210 bps to 21.9%. Employee cost was steady at 9.35%. Purchase of products for...

Tata Motors' (TML) Q4FY18 consolidated revenues were at | 91279 crore (up 18.2% YoY, 23.1% QoQ), vs. our estimate of | 76654 crore. The beat on consolidated revenue is mainly after JLR revenues came in at 7.6 bn vs. estimate of 6.0 bn. JLR wholesale volumes were at 182757 units (up 4.4% YoY) against our estimate of 155,005 units Consolidated EBITDA margins were at 13.1% (our estimate: 11.1%) down 226 bps YoY, up 30 bps QoQ. Reported EBITDA margin of JLR for Q4FY18 was at 12.2%, above our estimate of 12.6%. However,...