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MOSL: TATA MOTORS (Buy)-JLR’s wholesale volumes decline in a challenging market

Tata Motors: JLR’s wholesale volumes decline in a challenging market; Volumes down 16% YoY at Jaguar and 17.9% YoY at Land Rover

(TTMT IN, Mkt Cap USD8.1b, CMP INR180, TP INR246, 36% Upside, Buy)

 

• JLR’s wholesale volumes declined 17% YoY (-8% MoM) to 45.5k units (our estimate: 50k), including China JV volumes of 5k units (-51% YoY), in Dec’18.
• Jaguar volumes were down 16% YoY to 14.1k units (our estimate: 15k), while Land Rover volumes declined 17.9% YoY to 31.4k units (our estimate: 35k).
• JLR’s retail volumes fell 6.4% YoY in Dec’18, led by a 42.4% decline in China retails, partly offset by volume growth in the UK (+7.8% YoY), the US (+21.4% YoY) and EU (+7.6% YoY).
• Jaguar’s retail volumes grew 7.2% YoY, driven by models like E-pace and I-Pace. Volumes of other models declined substantially.
• LR’s retail volumes declined 11.4% YoY, as growth in Range Rover (+33.6%) and Range Rover Sport (+32.4%) was more than diluted by a decline across other models.
• Mr Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “We have seen a strong end to the year in North America, Europe and the UK. Sales were up despite challenging market conditions, including regulatory changes and diesel uncertainty, which have impacted sales performance throughout the year. The UK’s performance in particular has been encouraging in a market segment which is down. Sales of Land Rover models fell by 6.9% as market conditions in China and Europe and the run-out of the current Evoque held back performance. With the launch of the all-new compact yet sophisticated Range Rover Evoque in 2019, we expect to see a boost in demand.”
• The stock trades at 8.3x FY20E consolidated EPS, 2.3x EV/EBITDA and 0.6x P/BV. Maintain Buy with a target price of INR246 (Dec’20E SOTP-based).