Please refer to important disclosures at the end of this report 1 Y/E March – Consolidated ( ` cr) 3QFY12 3QFY11 % chg (yoy) Angel est. % diff Net sales 45,260 31,442 44.0 42,421 6.7 OPM (%) 15.1 14.3 81bp 11.8 329bp Reported PAT 3,406 2,424 40.5 2,560 33.0 Source: Company, Angel Research Stellar show at JLR drives overall performance: Tata Motors (TTMT) reported an extremely strong set of results, driven by stellar performance at JLR. The company’s top line grew by robust 44% yoy (25% qoq), led by 41.5% yoy (28.6% qoq) growth in JLR sales, which were driven by a 36.7% yoy (26.9% qoq) jump in volumes and 3.1% yoy (0.8% qoq) improvement in net average realization. The company’s operating margin surprised positively and stood at 15.1% on account of better-than-expected performance at JLR (EBITDA margin at 18.2%), which benefitted from superior product and geography mix, favorable forex and higher operating leverage. As a result, net profit increased by strong 40.5% yoy (81.4% qoq) to `3,406cr. Y/E March – Standalone ( ` cr) 3QFY12 3QFY11 % chg (yoy) Angel est. % diff Net sales 13,338 11,520 15.8 14,242 (6.3) OPM (%) 6.4 10.1 (376)bp 6.2 16bp Reported PAT 174 410 (57.6) 282 (38.4) Source: Company, Angel Research Standalone performance under pressure: TTMT posted disappointing standalone results on account of unfavorable product mix, higher marketing spends in the passenger vehicle (PV) business and raw-material cost pressures. The top line reported healthy 15.8% yoy (3% qoq) growth, driven by 21.5% yoy (10% qoq) growth in volumes. Net average realization, however, declined by 4.8% yoy (6.4% qoq) due to higher proportion of PVs in the total volume mix. Operating margin continued to be under stress and declined by 376bp yoy to 6.4%, led by higher marketing spends and commodity cost pressures. Hence, net profit declined by 57.6% yoy to `174cr. Outlook and valuation: We have revised our consolidated earnings estimates upwards by 19.5%/32.4% for FY2012/13 on account of better-than-expected JLRperformance during the quarter. We broadly retain our standalone earnings estimates and increase our JLR estimates over FY2012/13, driven by the increase in our volume and EBITDA margin estimates. We have increased JLR volume estimates by ~12% for FY2013 and margin estimates for JLR by ~100bp in FY2013. At `286, the stock is trading at 7.4x FY2013E earnings. We maintain Accumulate on the stock with an SOTP target price of ` 308. Key financials (consolidated) Y/E March ( ` cr) FY2010 FY2011 FY2012E FY2013E Net Sales 92,519 123,133 161,482 186,930 % chg 30.5 33.1 31.1 15.8 Net Profit 1,526 9,065 10,801 12,226 % chg - 494.0 19.2 13.2 EBITDA (%) 8.4 13.7 13.2 12.6 EPS ( ` ) 5.3 28.6 34.0 38.5 P/E (x) 53.5 10.0 8.4 7.4 P/BV (x) 10.0 4.8 3.5 2.6 RoE (%) 21.3 65.8 47.5 40.0 RoCE (%) 8.9 24.7 27.9 27.9 EV/Sales (x) 1.2 0.9 0.7 0.6 EV/EBITDA (x) 14.8 6.6 5.2 4.7 Source: Company, Angel Research ACCUMULATE CMP `286 Target Price `308 Investment Period 12 Months Stock Info Sector Bloomberg Code Shareholding Pattern (%) Promoters 35.0 MF / Banks / Indian Fls 14.9 FII / NRIs / OCBs 42.1 Indian Public / Others 8.0 Abs. (%) 3m 1yr 3yr Sensex 7. 8 ( 0.4) 88.9 Tata Motors 58. 0 15.7 938. 8 18,202 5,532 TAMO.BO 90,890 1.6 292/138 1,311,048 10 Market Cap ( `cr) Beta 52 Week High / Low TTMT@IN Face Value ( `) BSE Sensex NiftyReuters C ode Automobile Avg. Daily Volume Yaresh Kothari 022-3935 7800 Ext: 6844 [email protected]Tata Motors Performance Highlights 3QFY2012 Result Update | Automobile February 15, 2012
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Please refer to important disclosures at the end of this report 1
Y/E March – Consolidated (` cr) 3QFY12 3QFY11 % chg (yoy) Angel est. % diff
Net sales 45,260 31,442 44.0 42,421 6.7
OPM (%) 15.1 14.3 81bp 11.8 329bp
Reported PAT 3,406 2,424 40.5 2,560 33.0
Source: Company, Angel Research
Stellar show at JLR drives overall performance: Tata Motors (TTMT) reported an
extremely strong set of results, driven by stellar performance at JLR. The company’s
top line grew by robust 44% yoy (25% qoq), led by 41.5% yoy (28.6% qoq) growth in
JLR sales, which were driven by a 36.7% yoy (26.9% qoq) jump in volumes and 3.1%
yoy (0.8% qoq) improvement in net average realization. The company’s operating
margin surprised positively and stood at 15.1% on account of better-than-expectedperformance at JLR (EBITDA margin at 18.2%), which benefitted from superior
product and geography mix, favorable forex and higher operating leverage. As a
result, net profit increased by strong 40.5% yoy (81.4% qoq) to ` 3,406cr.
Y/E March – Standalone (` cr) 3QFY12 3QFY11 % chg (yoy) Angel est. % diff
Net sales 13,338 11,520 15.8 14,242 (6.3)
OPM (%) 6.4 10.1 (376)bp 6.2 16bp
Reported PAT 174 410 (57.6) 282 (38.4)
Source: Company, Angel Research
Standalone performance under pressure: TTMT posted disappointing standalone
results on account of unfavorable product mix, higher marketing spends in the
passenger vehicle (PV) business and raw-material cost pressures. The top line reported
healthy 15.8% yoy (3% qoq) growth, driven by 21.5% yoy (10% qoq) growth in
volumes. Net average realization, however, declined by 4.8% yoy (6.4% qoq) due to
higher proportion of PVs in the total volume mix. Operating margin continued to be
under stress and declined by 376bp yoy to 6.4%, led by higher marketing spends and
commodity cost pressures. Hence, net profit declined by 57.6% yoy to ` 174cr.
Outlook and valuation: We have revised our consolidated earnings estimates
upwards by 19.5%/32.4% for FY2012/13 on account of better-than-expected JLR
performance during the quarter. We broadly retain our standalone earnings estimates
and increase our JLR estimates over FY2012/13, driven by the increase in our volume
and EBITDA margin estimates. We have increased JLR volume estimates by ~12% for
FY2013 and margin estimates for JLR by ~100bp in FY2013. At ` 286, the stock is
trading at 7.4x FY2013E earnings. We maintain Accumulate on the stock with anSOTP target price of `308.
Key financials (consolidated)Y/E March (` cr) FY2010 FY2011 FY2012E FY2013E
Net sales EBITDA EBITDAM (%) Net profit Net sales EBITDA EBITDAM (%) Net profit
Tata Motor Finance 524 95 18.2 71 332 36 10.9 33
Tata Technologies 439 79 17.9 58 313 39 12.5 28
Tata Daewoo 705 32 4.5 (1) 659 25 3.8 (3)
TML Drivelines 174 106 60.9 61 146 81 55.7 42
Subsidiary Total 1,842 312 16.9 189 1,450 181 12.5 99
Source: Company, Angel Research
Outlook and valuation
We have revised our consolidated earnings estimates upwards by 19.5%/32.4%
for FY2012/13 on account better-than-expected JLR performance during the
quarter. We broadly retain our standalone earnings estimates and increase our JLR
estimates over FY2012/13, driven by the increase in our volume and EBITDA
margin estimates. We have increased JLR volume estimates by ~12% for FY2013
and margin estimates for JLR by ~100bp in FY2013.
Exhibit 15: Change in estimates (consolidated)
Y/E March Earlier estimates Revised estimates % chg
FY2012E FY2013E FY2012E FY2013E FY2012E FY2013E
Net sales (` cr) 144,712 162,452 161,482 186,930 11.6 15.1
OPM (%) 12.0 11.6 13.2 12.6 114bp 104bp
EPS (`) 28.5 29.1 34.0 38.5 19.5 32.4
Source: Company, Angel Research
At ` 286, the stock is trading at 7.4x and 4.7x FY2013E earnings and EV/EBITDA,
respectively. We maintain Accumulate on the stock with an SOTP target price of
`308. We have valued the domestic core business at ` 67/share, implying 10x
FY2013E earnings. Our embedded value of the subsidiaries and investments in
TTMT's books (including JLR) works out to ` 241/share. We have valued JLR at 7xFY2013E earnings, implying a ~30% discount to the average multiple of its peers.
13.4 10.913.9 14.1 11.9 11.9 12.6 13.2 13.0
41.946.1 45.2
42.346.4
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('000 units) Jaguar Land Rover
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('000 units) North America UK Europe Russia China Others
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Tata Motors
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
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