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MOSL: TATA MOTORS (Buy)- JLR’s Jul’18 wholesales of 35k units below estimate

Tata Motors: JLR’s Jul’18 wholesales of 35k units below estimate; Market-specific issues in China, Europe, UK and US impacted sales

(TTMT IN,Mkt Cap USD11.5b, CMP INR250, TP INR360, 44% Upside, Buy)

 

• JLR’s wholesale volumes declined 32% YoY (-7% MoM) to 35k units (includes China JV volumes of 4.1k units; est. of 47k units) in Jul’18.
• Jaguar volumes declined 14% YoY to 12.4k units (est. of 13.5k units), while Land Rover volumes fell 39% YoY to 22.6k units (est. of 33.5k units).
• JLR’s retail volumes declined 21.6% YoY (-30.6% MoM) to 36k units, as Jaguar retails fell 15.2% YoY (-32.7% MoM) to 10.9k units and LR retails declined 24% YoY (-29.6% MoM) to 25.2k units.
• In Jaguar, all brands witnessed a decline ranging from 17-40%. 
• LR’s retail volumes declined 24% YoY to 25.2k, as most models witnessed a decline, except Velar, which reported 4.2k units (1.7k units in July-17).
• Region-wise, volumes in all major markets declined YoY (-18.3% in UK, -9.5% in US, -26.5% in Europe and -46.9% in China). Volumes in RoW grew 8.6% (-20% MoM).
• Decline in sales in China is reflecting continued market volatility in the first month of the duty change and trade tensions.
• Sales in Europe and the UK were impacted by the industry wide issue of delays in WLTP certification of the 2019 model year vehicles.