Comments
Prabhudas Lilladher
Tata Motors (Buy)
CMP: ₹305.3
Target: ₹378
Tata Motors held its Investor day where the management discussed in detail about its medium-to-long term strategy (Turnaround 2.0) for the domestic business. With focus on topline growth, customer centricity, process improvement, agile cost management and a lean and accountable organisation, the management reiterated the following key objectives: 1) Regaining market share in both commercial vehicles and passenger vehicles (up 70 bps in CVs and up 50 bps in PV for FY18); 2) EBIT margin target of 3-5 per cent between FY19-21 and 5-7 per cent in the long run (FY18 EBIT margins at 0.8 per cent) 3) Higher free cash-flow generation due to better operating performance and investments within affordable limits.
Valuations: We welcome the increased disclosures and disinvestments from loss-making/non-core subsidiaries. Management’s focus on improving the performance of the standalone entity is now clearly visible and we expect it to continue. The near-term outlook for JLR, however, remains muted both for volumes and profitability, EBIT margin target of ~7-9 per cent (earlier 8-10 per cent) mainly due to accelerated product development expenses. With JLR’s full product range available in EV/Hybrid variants from 2020 gives us further confidence. Given the attractive valuations and buoyant management guidance, we maintain ‘buy’.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.