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MOSL: TATA MOTORS (Neutral)-JLR’s May’19 wholesales in line at 39.9k units; Jaguar volumes decline 15% YoY

Tata Motors: JLR’s May’19 wholesales in line at 39.9k units; Jaguar volumes decline 15% YoY while Land Rover volumes skid 20% YoY

(TTMT IN, Mkt Cap USD7.6b, CMP INR169, TP INR190, 12% Upside, Neutral)

 

• JLR’s wholesale volumes declined 18.2% YoY (+12.5% MoM) to 39.9k units (in-line), including the China JV volumes that fell 40% YoY to 4.2k units.
• Jaguar volumes declined 14.7% YoY to 13k units (v/s est. of 14.8k), while Land Rover volumes declined 19.9% YoY to 26.8k units (v/s est. of 25k units).
• JLR’s retail volumes in May’19 declined 12% YoY, impacted by sales decline across markets (sales in China/Europe fell 26.4%/9.6%).
• Jaguar’s retail volume declined 9.4% YoY led by decline in sales across models, except the I-PACE (reported sales at 1.6k units).
• LR’s retail volume too declined 13.5% YoY, as all its models witnessed sales decline, except the RR EVOQUE (sales increased 6% YoY to 5.4k units).
• Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “Although sales dipped at Jaguar this month, we were pleased to see the continued strong response to the award-winning I-PACE. We also launched the Jaguar E-PACE Chequered Flag edition, which generated a high level of interest with customers and commentators alike.”
• We believe that sustainable recovery in JLR volumes, particularly in the profitable markets of China, is the key to value-accretive growth and stock performance. This is particularly important due to the impending down-cycle in its cash-cow CV business in FY21.
• The stock trades at 12.2x/11.2x FY20/FY21 consolidated EPS. Maintain Neutral with a target price of INR190 (Mar’21 SOTP-based).