MOSL: TATA MOTORS (Buy)-Below est- margins miss even after adjusting for one-offs
Tata Motors: Below est; margins miss even after adjusting for one-offs
(TTMT IN, Mkt Cap USD20.8b, CMP INR309, TP INR471, 52% Upside, Buy)
- Consol revenues grew 18% YoY to INR913b. EBITDA grew 1% YoY to INR109b (est INR125b). Adj PAT fell 34% YoY to INR28.7b (est INR45.4b).
- JLR - higher incentives and other expenses impact margins: Net sales at GBP7.6b (in-line) grew 3.9% YoY. Better product mix and QoQ decline in incentives led realization growth of 3.6% QoQ. Adj. for impairment expense, EBITDA margins declined 110bp YoY (+270bp QoQ) to 13.5% (est 14.2%). However, higher tax rate resulted in adj. PAT decline of 39% YoY to GBP334m (est GBP450m).
- S/A - unfavorable mix, higher operating expense dent EBITDA: Revenues grew 45% YoY to INR197b (est INR192b) led by volume/realization growth of 38%/6% YoY respectively. EBITDA margin came in at 6.9% (est. 9.5%), expanded 260bp YoY (-200bp QoQ) driven by unfavorable mix (high share of PV) and higher operating expense. As a result, S/A reported impairment of INR9.6b. Adj PAT came in at INR5b (INR5.5b).
- Earnings call highlights: a) It is reducing R&D capitalization rate for the group, with new capitalization rate for JLR at 70% (v/s 85% earlier). This will have 100bp impact on EBIT margins for JLR. b) Expects higher sales growth and improved profitability in FY19. Expecting EBIT margin at 4-7% EBIT over FY19-21 and 7-9% in the long term. c) It has guided for capex of GBP4.5b capex (v/s GBP4.2b in FY18). d) JLR is targeting dividend payout of 25% of PAT (v/s 20% in FY18) going forward. e) After 5 years, India business has turned FCF positive (~INR 13.4b) for the first time.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.