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JMFL
Tata Motors (Buy)
CMP: ₹469.45
Target: ₹600
Tata Motors reported strong numbers for Q4FY17 with consolidated EBITDA margin at 15 per cent, driven by healthy margin recovery at JLR (14.5 per cent margin) and slight improvement in standalone business post demonetisation impact.
During the Analyst meet, management shared its plan for enhancing market share by 5 per cent in both CV and PV (passenger vehicle) segments and improving profitability of the standalone business. The company is targeting to plug gaps in the CV portfolio by introducing new products during FY18, reducing number of platforms by moving to modular platforms in PVs, downsizing supplier base and cost reduction efforts. Exports and Defence segments will be boosted to minimise impact of cyclical nature of CV business.
JLR volume growth will continue at a healthy pace supported by multiple new launches and healthy vehicle sales outlook in major markets.
Key risks: Higher-than-estimated stress in JLR volume/margin, prolonged weakness in India profits and adverse currency movements.
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