MOSL: TATA MOTORS (Buy)-Below est.-Higher RM/marketing cost and op. deleverage hurt JLR
Tata Motors: Below est.; Higher RM/marketing cost and op. deleverage hurt JLR
(TTMT IN, Mkt Cap USD22.2b, CMP INR417, TP INR542, 30% Upside, Buy)
- Consol. EBITDA declined 45% YoY (-54% QoQ) to INR49.65b (est. of INR66.6b), translating into EBITDA margin contraction of 310bp YoY (-550bp QoQ) to 8.5% (est. of 11.3%). Adj. PAT fell 90% YoY to INR3b (est. of INR10.1b). PAT was also hurt by a stronger INR (impact of INR7.9b).
- JLR - higher RM/marketing cost and op. deleverage hurt profitability: Net realization increased 4% QoQ (+7% YoY). EBITDA margin shrunk 460bp YoY (-660bp QoQ) to 7.9%, impacted by higher RM/marketing costs and operating deleverage. EBITDA declined 34% YoY to GBP442m (est. of GBP711m). Adj. PAT fell 53% YoY to GBP125m (est. of GBP239m). Share of China JV was at GBP77m (incl. GBP31m of local market incentive).
- S/A - weaker operating performance, but lower interest/depreciation drives PAT: Realization grew 2% YoY (-9% QoQ) to INR829k (est. of ~INR823k). Net sales declined 12% YoY (-33% QoQ) to ~INR90.9b (est. of ~INR90.3b). EBITDA margin came in at 0% (est. of 1.9%), down 650bp YoY, impacted by op. deleverage. Lower interest and depreciation restricted net loss to ~INR4.7b (est. of ~INR5b), as against PAT of ~INR1b in 1QFY17.
Tata Motors is an automobile company, engaged in the manufacture and sale of commercial and passenger vehicles primarily in India. Co. provides cars, utility vehicles, trucks, buses, and defense vehicles, as well as develops electric and hybrid vehicles for personal and public transportation. In addition, Co. is engaged in the provision of engineering and automotive applications, as well as machine tools and factory automation applications; construction equipment manufacturing; automotive vehicle components manufacturing, among others. Co. markets its vehicles in Europe, Africa, the Middle East, South East Asia, South Asia, and South America.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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