"Tata Motors reported numbers above expectations on the back of higher JLR volumes, supported by higher realisations from the JLR business on the back of rich product mix as well as rich geographical mix. Higher contribution from JLR volumes, improved the realizations both sequential as well as on yearly basis. Domestic market remained subdued & is expected to turnaround from H2FY15. JLR continued with its good run in to yet another quarter, based on higher contribution from new launches such as Range Rover Sport, new Range Rover and Jaguar F-TYPE. JLR recorded its best ever margins of 20.3% based on the stellar performance of its key models as well as geographical mix."
"We believe, JLR would continue to drive growth for Tata Motors based on its rich product profile & changing geographical mix. China will continue to lead the growth for JLR with the company's China Plant expected to come on stream by end of FY15. Tata Motors with a slew of launches expected in both the Jaguar as well as Range rover side, would help improve volumes as well as maintain its margins. We expect the domestic business of Tata motors to start improving from H2FY15, which would further boost the consolidated revenues. Tata Motors Revenues were up on the back of higher volume growth for the JLR business, coupled with double digit realization growth mainly attributed to the JLR product mix & geographical mix. Revenues grew 38.3% YoY at ` 646.83 bn on the back of lower volumes YoY & higher realizations by 47.6%. Lower volumes were mainly on account of slowdown in the domestic markets on the back of overall economic slowdown. On QoQ basis revenues were flat with volumes down by 9% & realizations up by 9%."
"TAMO's margins were up both sequentially as well as on YoY basis & stood at 18.2% as against 16.5% in the previous quarter & 14.4% last year. JLR reported margins of 20.3% as against 17.2% sequentially & 15.8% last year, based on higher contribution from premium models as well as favorable geographical mix. The company reported EBIDTA at ` 117.4bn, up by 9% QoQ & 74% YoY. The company reported PAT of ` 53.98 bn, up 38% QoQ & 213% YoY. Better operating performance, coupled with higher other income & Forex gain of ` 940 mn as against loss of ` 1786 mn last year led to better PAT margins. PAT margins stood at 8.3% as against 6% in last quarter & 3.7% in the previous year. JLRs revenues stood at GBP 5.35bn up by 31% YoY, EBIDTA at GBP 1.08bn, up by 68% YoY & PAT stood at GBP 693 mn up by 128% YoY. EBIDTA margins stood at 20.3% up 451 bps on YoY basis. Richer product mix supported by launch of new Range Rover Sport, new Range Rover and Jaguar F-TYPE coupled with richer geographic mix, with increased volumes in Chinese markets helped company improve upon its margins. JLR continues with its growth in the Chinese markets, with a growth of 77% YoY in the Chinese markets & contributing 29.5% of the total JLR volumes. Europe contributed 18.1% to the volumes & grew by 16% YoY. North America contributed 15.7% to the volumes & grew by a 23% YoY, UK contributed 15.9% to the volumes & grew by a 13%. Asia Pacific grew by 17% & now contributes 6% to the JLR wholesale volumes, with ROW contributing 18.3% & growing by 2% YoY. In December 2013, Jaguar Land Rover issued a new $700m bond at 4.125% due in 2018 & In January 2014, the company issued a new £400m bond at 5.0% due in 2022. JLR also made a tender offer for all of the £500m, 8.125% bonds due 2018 and all the $410m, 7.75% bonds due in 2018. The GBP tender offer closed with £304m of the bonds being tendered in February & the remaining by May FY14. With this the company plans to bring down the cost of its funds & also help in the Capex plans of the company."
"JLR plans to continue to build sales momentum with the new Range Rover, new Range Rover Sport, Jaguar XF Sportbrake and Jaguar F-TYPE. It also plans to launch of new Discovery Sport, Jaguar XE, Ingenium family of 2l engines in new engine plant and new China JV manufacturing plant. JLR plans to Invest £240m in new plant in Brazil, with a capacity of 24,000 vehicles & production is expected to start by early 2016. On the domestic front MHCV business has started signs of pick up though on a relatively lower base, we expect the MHCV business to start improving from H2FY15. With further expansion of Prima and Ultra Range, product refreshes/variants in SCV and pickups, Tata Motors is well geared up for the upturn in CV demand. On the PV front the recent launches of Nano Twist, Vista VXTech & All-New Tata Aria are expected to augur well for the company once the demand scenario improves. The launch of ZEST in the current month & BOLT in coming months are expected to drive growth for the PV business. We believe, Tata Motors continued focus to grow the JLR business in times when domestic markets are going through a worst ever phase has paid rich dividends to the company. We expect JLR business to drive growth for Tata Motors going ahead with the company investing heavily in capacity building."
"At the current Price, Tata Motors is trading at a PE of 8.8xFY15E & 7.5xFY16E, we believe the company would continue to grow the JLR volumes with emerging markets including China the key to higher volumes. Any revival in the domestic markets ahead of FY16 can act as a positive catalyst though not too significant. We maintain our Accumulate rating on the stock with a price target of Rs 479," says Dolat Capital research report.
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