Tata Motors Ltd. share price target

Tata Motors (TML) reported operating performance was in line with our estimates. While revenue (Rs722.6bn) was mere 0.5% above our estimate, the reported EBITDA (Rs93.8bn) was 1.5% above our estimate. Though EBITDA margin contracted by 140bps yoy to 13.0%, it came close to our expectations of 12.8%. Key highlights (1) standalone business reported positive EBITDA margin (4.6%), (2) China JV contributed PAT of GBP22mn to JLR and (3) JLR reported yoy decline in ASPs due to rising variable costs. Post correction, we recommend BUY on the stock with SOTP based Target Price of Rs349....

We recently met TTMT's management and also spoke to one of JLR's largest dealers in China.Herearethekeytakeaways(1)volumeoutlookcontinuestobepositivewithnew launches driving growth. TTMT will surpass our FY16 volume assumptions of 496,000...

Tata Motors (TTMT) is expected to witness better traction from North America and Europe with ongoing healthy volume growth supported by new launches at regular interval. We believe it would partially compensate for slowdown in other markets like China and Asia.

Operating results below estimates: Tata Motors 2QFY2016 results have come in below our estimates on the operating front. Consolidated revenues grew marginally by 1% yoy to Rs61,318cr (coming slightly ahead of our estimates of Rs57,484cr). Growth was subdued, mainly due to flattish top-line at JLR. JLRs volumes grew a healthy 12% yoy during the quarter but an adverse product (higher sales of relatively lower priced cars in the companys product portfolio) and regional mix (lower China sales) led to lower realization, thus dragging the top-line. The consolidated operating margin at 11.2% was below our estimate of 13.4%. JLRs EBIDTA margin at 12.2% was significantly below our estimate of 15%. JLRs margins were impacted by lower China sales, adverse product mix and higher launch expenses. During the quarter, Tata Motors reported a loss at the net level due to a one-off charge of Rs2,493cr related to damage caused by fire explosions caused at the China port location, which affected JLR vehicles. However, Tata Motors had a tax credit to the tune of Rs704cr which resulted in the Adj profit coming in at Rs2,223cr for the quarter (better than our estimate of Rs2,041cr). Outlook and valuation: JLRs volumes are likely to recover...

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. Jaguar-Land Rover...

JLRs 2QFY16 APAT of GBP 153mn was sharply below expectations, with adjusted EBITDA margin declining by 250bps QoQ to 13%. A combination of factors, including weak product/region mix, 50bps QoQ increase in variable marketing expenses and sub-optimal utilisation of its ingenium engine plant led to a miss in topline/EBITDA levels.

Tata Motors (TTMT) delivered disappointing Q2FY16 performance with margin contraction at JLR, on account of inferior geographical mix. Its consolidated Revenues/EBIDTA/PAT grew 6%/-28%/-83% YoY and declined 0%/24.5%/81% QoQ to Rs 613bn/Rs69bn/Rs5.5bn, as against our estimate of Rs 583bn/Rs71bn/Rs15bn in the quarter.

9 Standalone division posted strong results with EBITDA margin at 6.8% being ahead of ourestimateof6.3%leadingtoa9%beatatEBITDA Key highlights: Overall a stark compression in JLR margins to 13% spooked us as well as...

strong with 10 launches in key markets until 4QFY16 (implying 15% growth between SeptemberMarch 2016), (3) consumer downtrading clearly evident with only 2530% of RR and RR Sport sales coming from top variants (vs. 50%+ last year), (4) given sluggish...