Tata Motors Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Tata Motors' (TML) Q4FY16 results were above our estimates. Consolidated revenues were at | 80,684 crore (up 19.4% YoY, 11.7%...

Tata Motors (TTMT) Q4FY16 performance was way above our as well as streets estimates. Operating margin expansion at JLR was on account of better product mix and favorable cross currency movement. Its consolidated Revenues/EBIDTA/PAT grew 19%/35%/158% YoY and 12%/21%/35% QoQ to Rs 807bn/Rs114bn/Rs47bn (our estimate of Rs 759bn/Rs100bn/Rs35bn) in the quarter. Consolidated EBIDTA margin increased by 166bps YoY and 113 bps QoQ to 14.1%, benefitted by margin expansion at JLR amid favourable currency.

JLRs 4QFY16 topline at GBP 6,594mn ( 13% YoY) beat expectations as net ASP rose 5% QoQ despite a weaker regional/model mix. Adjusted for one-offs, EBITDA margin at 16.2% ( 180bps QoQ) positively surprised with gross margin expansion ( 240bps QoQ to 41.9%).

In Q4FY16, consolidated numbers posted a threefold profit on excellent performance at JLR as well as standalone business. JLR volumes which grew by 14% yoy (ex China JV) along with benign commodity costs and strong performance...

9 JLR's EBITDA margin was a strong 16.2% (we expected 14%). This marks a sharp rebounddespiteaweakproductmix(RRandRRsportcontributiondown) 9 AdjustedEBITDAat1069mnwas32%aboveourestimate...

Consol sales at INR807b (v/s INR732b; +19% YoY). EBITDA at INR113.8b (v/s est INR91.5b; +35% YoY). Adj. PAT at INR47b (v/s est INR39.5b; +158% YoY). JLR realization at GBP44k (v/s est GBP42k) grew 5% QoQ due to better product...

Background: Tata Motors (est. 1945) is India's leading automobile maker, and is among the top 10 auto manufacturers in the world. The company has more than 130 models spanning a wide range of Heavy, Medium & Light Commercial Vehicles, Passenger Cars and Multi-Utility Vehicles. Tata Motors is the market leader in Commercial Vehicles - both M&HCV; and LCV with their established brand and service network including the hinterland offering the competitive advantage. Engine and transmission for some models of cars are manufactured in a JV with Fiat. The company operates out of plants at Jamshedpur, Pune, Lucknow, Sanand and Pantnagar....

Tata Motors (TML) has reported strong numbers in 4Q owing to stellar performance in JLR business, which posted 16.2% adj EBIDTA margin (v/s our est of 14.1%) due to healthy growth in ASPs. In 4Q, the ASPs in JLR business grew by 4.7% qoq led by favorable product-mix. Further, Chery JV contributed 49 mn to JLR's bottom-line. TML's standalone business posted EBIDTA margin of 7.1% v/s 1.5%...

Land Rover volumes declined by ~6.3% YoY to 31,745 units (v/s est. 43,000 units), due to product fatigue for RR, RR Sport and Evoque. Retail sales of the above 3 were down 9% in April 2016. There is also an impact of ~1.5k units...

We recently met TTMT's management and also spoke to one of JLR's largest dealers in China.AfteradullFY16,Chinawillstrapintothedriver'sseatoncemorewithnewmodel launchesandthelowbasehelpingstronggrowth.Developedmarketswillseehigherthan...