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MOSL: TATA MOTORS (Buy)-JLR’s June-2018 wholesales below estimate at 37.5k; Deferred purchase in China due to import duty cut

Tata Motors: JLR’s June-2018 wholesales below estimate at 37.5k; Deferred purchase in China due to import duty cut impacts sales

(TTMT IN, Mkt Cap USD13.6b, CMP INR275, TP INR459, 69% Upside, Buy)

 

• JLR's wholesale volumes declined 24% YoY (-20.5% MoM) to 37.5k units (est. of 50k units; includes China JV volume of 7.6k units) in June 2018.
• Jaguar volumes declined 16.9% YoY to 10.4k units (est. of 15.5k units), while Land Rover volumes fell 26.6% YoY to 27.1k units (est. of 34.5k units).
• JLR's retail volumes increased 0.9% YoY (+7.8% MoM) to 52k units, as Jaguar retails grew 6.4% YoY (+12.6% MoM) to 16.3k units, while LR retails declined 1.5% YoY (+5.8% MoM) to 35.7k units.
• Growth in Jaguar volume was led by E-pace (4.5k units), while volumes of other models like XF, F-Pace and XE declined 20.2%, 30.8% and 12.5% YoY, respectively.
• LR's retail volumes fell 1.5% YoY to 35.7k due to a decline in most models, barring Velar (5.4k units) and RR Sport (+2.2% YoY).
• Region-wise, sales in the UK and the US grew 0.9% and 7.4% YoY, respectively. However, in China, sales declined 9.5%, as the reduction in import duties on passenger vehicles in China from 1st July continued to result in deferred purchases. In Europe, too, sales declined by 3.8%.