Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Tata Motors - Cost improvements reassuring - ICICI Securities

Posted On: 2020-08-03 08:45:34

Tata Motors' (TTMT) Q1FY21 operational performance was better than consensus estimates as JLR posted positive EBITDA margin of 3.5% (down only 70bps) even as revenue dropped 44% YoY. The margin resilience is a reflection of continued success of aggressive cost reduction programmes (e.g. Project Charge+: FY21 cash savings target raised by GBP1bn to GBP2.5bn). The confidence on better capital allocation and cash management has led to improved guidance: a) India business to turn FCF positive in FY21 and b) JLR to be FCF positive in FY22. The core business in India remains in a difficult spot in CV segment while few green shoots are visible on market share gains in PVs. JLR's growth in FY22 may be driven by supportive market conditions in China, North America, coupled with new model launches (PHEVs/BEVs). Maintain BUY.

- Key highlights of the quarter: Standalone revenue declined ~80% YoY to ~Rs2.7bn while JLR revenue declined 44% to ~GBP2.8bn. JLR's EBITDA margin dropped only 70bps to 3.5% driven by cost reductions (warranty costs reduced 210bps). Project Charge+ delivered strong recurrent cash savings of GBP1.2bn in Q1FY21 driven by GBP 0.5bn of cost reduction. JLR reported FCF of GBP -1.5bn (lower than expected of GBP -2bn) largely due to temporary working capital outflow of ~GBP1.1bn. China JLR JV also turned marginally PAT positive as revenues rose 31% YoY to GBP 479mn and EBITDA margins rose to 9.8% (up 11.2% YoY).

- Key takeaways from concall: Management indicated : a) JLR delivered historical high ASPs (~GBP58.5k) due to superior product (higher sales of SUV5) and region mix (higher share of China and North America); b) strong response to New Defender 110 (>30k bookings) is expected to aid volumes in H2FY21; c) FY22 would witness new model offerings with electrified options and this could drag margins if mix share rose significantly; d) positive tailwinds expected in FY22 as most profitable RR/RR Sport would undergo a major refresh and e) capex for JLR trimmed to GBP2.5bn while for India business it has been cut to Rs15bn for FY21.

- Maintain BUY: We believe consensus is discounting a relatively low success rate for JLR to remain self-sustaining. The enhanced management focus on continued delivery of cost savings coupled with prudent capital allocation are likely to rebuild investor confidence in JLR. India business is at a cyclical low in terms of underlying business, the same is likely to improve in FY22. We maintain our target JLR multiple to 2.5x, maintain our BUY rating on the stock with a revised SoTP-based target price of Rs131 (earlier: Rs126).

Shares of TATA MOTORS LTD. was last trading in BSE at Rs.113.05 as compared to the previous close of Rs. 104.7. The total number of shares traded during the day was 15667312 in over 78394 trades.

The stock hit an intraday high of Rs. 114.4 and intraday low of 103. The net turnover during the day was Rs. 1740978959.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Zydus Wellness - Leadership in niche categories; initiate at BUY - ICICI Securities

Power - Setting the stage - ICICI Securities

Company Update - Elgi Equipments - ICICI Securities

Nano Nivesh - The Anup Engineering - ICICI Securities

RBI OMO announcement of Rs. 10000 crore - Angel Broking

TCS deal win - Sep 24, 2020 - Angel Broking

View on Pre-Monetary Policy by Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank

US FDA approval to Zydus Cadila - Angel Broking

HDFC Securities Institutional Research Desk: Cement Sector Thematic - Spotting the sweet spot

Bharat Forge - Expectation hurdle remains steep - ICICI Securities


Mutual Fund Review - September, 2020 - ICICI Securities

UTI AMC announces IPO date - Angel Broking

Asian Paints - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Britannia Industries - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Hexaware Technologies (Not Rated): Hexaware accepts 475/share as final delisting price - ICICI Securities

CAMS IPO - Day 2 Subscription - Angel Boking

Chemcon Speciality Chemicals - IPO subscribed 12.62 times on second day - Angel Broking

General insurance - Fire, health remain growth drivers, rising Covid claims a concern - ICICI Securities

Supreme Industries - Perfect recipe for rerating; upgrade to BUY - ICICI Securities

Titan Company - Best positioned to gain from faster-than-expected recovery. Upgrade to ADD - ICICI Securities

Sector Update - Telecom - Sep 23, 2020 - ICICI Securities

Allcargo Logistics - Highlights of Blackstone deal - ICICI Securities

I-direct Instinct - Gokaldas Exports

Economy: RBI's trilemma: allows for INR strength - Kotak

HCL Technologies - Company Update - ICICI Securities

Chemcon Speciality Chemicals - IPO Review - ICICI Securities

Angel Broking - IPO Note - YES Securities

TCS - Announcement of its blockhchain based solutions on Microsoft Azure - Angel Broking

Amber Enterpirses acquire Sidwal - Angel Broking

Dixon Technologies - Buy - YES Securities

HCL Technologies acquisition of DWS Limited - Angel Broking

Allcargo Logistics CFO Resignation - Angel Broking

Upgrade to BUY on Gateway Distriparks - Strengthening the balance sheet - HDFC Securities

BUY on ITD Cementation - Execution pickup awaited - HDFC Securities

Allcargo Logistics - Trying to stich through an integrated offering - ICICI Securities

Polymer price tracker - Other polymer (ex-PVC) prices too firm up - ICICI Securities

Angel Broking - IPO Review - ICICI Securities

IPO Review - Computer Age Management Services - ICICI Securities

Company Update - EIH Ltd - ICICI Securities

Gladiator Stocks - Godrej Properties - ICICI Securities

Company Update - Dr Reddy's Laboratories - ICICI Securities

Gladiator Stocks: Pharma Thematic - ICICI Securities

Company Update - Housing & Urban Development - ICICI Securities

Covid Recovery Pulse - E-Way bill generation shows recovery signs with auto volumes flat - ICICI Securities

Quant Pick - UltraTech Cement - ICICI Securities

Lupin & Cipla - Positive News - Angel Broking

Sterling and Wilson Solar Ltd - 106.71 MW order win - Angel Broking

Dr. Reddy's Laboratories - Settles Revlimid litigation in US - ICICI Securities

Natco Pharma - Natco to launch first generic Revlimid - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019