Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Reiterate ADD on Tata Motors - Volatile environment - ICICI Securities

Posted On: 2020-08-05 09:27:06

Mr. Aditya Makharia, Institutional Research Analyst, HDFC Securities.

In 1QFY21, Tata Motors reported a loss of Rs 84bn due to the impact of the lockdown on the India business and at JLR. The silver lining was that CJLR (China JV) has broken even this quarter as retails in China recovered sharply. Tata Motors is continuing with its cost-cutting initiatives (Charge+ savings target is raised to GBP 2.5bn for FY21 from GBP 1.5bn earlier). The company is moving ahead with the subsidiarisation plans for the India passenger car business. Geopolitical uncertainties will partially offset the improving outlook, in our view. Reiterate ADD.

1QFY21 financials: (1) Standalone: Revenue declined 80% YoY due to a similar drop in volumes. EBITDA loss came in at Rs 7bn due to negative op-lev. Net loss was at Rs 21.2bn. (2) JLR: Revenue declined 44% YoY, in line with our estimates, owing to a 53% drop in volumes (ex-CJLR). JLR reported an EBITDA of 3.5% (aided by favourable hedge reserves and furlough related benefits from the UK government). However, the division reported a PBT/PAT loss of GBP 413/648mn. CJLR achieved breakeven with an EBITDA margin of 9.8% and PAT of GBP 1mn. (3) Consolidated: Revenue at Rs 319bn declined 48%. EBITDA margin at 5.4% (vs 5.9% QoQ) was a positive surprise. Adj. net loss came in at Rs 84.2bn owing to higher tax (due to deferred tax charge of GBP 235mn related to the reversal of previous losses).

China-an early recovery: While JLR's global retails were down 42%, China Land Rover's retails were up +12%. Most countries are now witnessing a pick-up in volumes. Cost savings at JLR: Charge+ gained momentum with savings of GBP 1.2bn in 1Q. Targets are enhanced to GBP 6bn (earlier GBP 5bn). 1Q FCF at negative GBP 1.5bn was better than estimates.

Seeking partner for PV business: Tata Motors is moving ahead with its plans for subsidiarisation of the local car business. This should happen in a time frame of 9-12 months and will lower the capital intensity for the India business. The segment assets of this division are Rs 167bn.

Maintain ADD: We set a revised Jun-22 SOTP based TP of Rs 118. We value the India business at 9x EV/EBITDA, JLR at 2x EV/EBITDA and the China JV at 8x PE (which has surprised on the upside). Key risks: Earlier-than-expected stake sale of the PV business and an increase in geopolitical risks.

Shares of TATA MOTORS LTD. was last trading in BSE at Rs.115.5 as compared to the previous close of Rs. 111.4. The total number of shares traded during the day was 4145395 in over 15392 trades.

The stock hit an intraday high of Rs. 117.65 and intraday low of 111.95. The net turnover during the day was Rs. 476055754.

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:

Mazagon Dock IPO fully subscribed on Day 1 - Angel Broking

Pharma - Sector Thematic - Cardiac: the heartbeat of domestic market - HDFC Securities Institutional Research Desk

Walmart-Tata Retail Deal - Mr. Himanshu Nayyar, YES SECURITIES

HDFC Securities Institutional Research Desk: Chemical Conference Report

Lupin - Launch of Fosaprepitant - Angel Broking

Infosys - Key beneficiary of increased IT spending - Angel Broking

Gateway Distriparks - Holding structure simplified; prepared for next phase of growth - ICICI Securities

Visaka Industries - Demand and pricing tailwinds sustain; maintain a compelling BUY - ICICI Securities

GSK Pharmaceuticals - Analyst call highlights - Sep 28, 2020 - ICICI Securities

HeidelbergCement India - Play on better priced Central India; initiate with BUY - ICICI Securities

Healthcare - Diagnostics: Multiple tailwinds likely to emerge - ICICI Securities

Mazagon Dock Shipbuilders Ltd - IPO Review - ICICI Securities

Persistent Systems - 28th September 2020 - Angel Broking

Canara Bank - 28th September 2020 - Angel Broking

Subscribe to UTI Asset Management Company Limited - IPO Note - Angel Broking

Multiplex Sector - Mr. Jyoti Roy - DVP - Equity Strategist, Angel Broking Ltd

Sale of Sequent stake to Strides Pharma - Angel Broking

Subscribe to Mazagon Dock Shipbuilders Ltd - IPO Note - Angel Broking

JSW Energy - First big renewable step - ICICI Securities

V-MART Retail - Best play in value fashion segment; initiating with BUY - ICICI Securities

Gas sector - New winners and losers likely on policy changes in gas sector - ICICI Securities

Mazagon Dock Shipbuilders Limited - IPO Note - Geojit

UTI Asset Management Company Limited - IPO Note - Geojit

Preview on RBI Monetary Policy - Oct 2020 - Shanti Ekambaram

Rollover Report for September 2020 - October 2020: Angel Broking

Covid Recovery Pulse - Sep 25, 2020 - ICICI Securities

Quick Comment - Suven Pharmaceuticals - ICICI Securities

Derivatives Strategy - Sep 25, 2020 - Positional Option - ICICI Securities

Gladiator Stocks - Ramco Cement - ICICI Securities

IPO Review - UTI Asset Management Company - ICICI Securities

Stock of the Day - Zensar Technologies - Sep 25, 2020 - Angel Broking

Accenture Q4FY2020 Result - Angel Broking

Granules India receives ANDA approval - Angel Broking

Zydus Cadila receives US FDA approval - Angel Broking

Cipla - ANDA approval - Mr. Yash Gupta - Equity Research Associate, Angel Broking Ltd

Mindspace REIT - Mr. Yash Gupta - Equity Research Associate, Angel Broking Ltd

UTI AMC - IPO - Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd

Balkrishna Industries - Growth momentum continues - ICICI Securities

Rollover Analysis (September 25): Nifty starts October series with low OI amid high volatility

Derivatives View (September 25): Sell Bank Nifty in range of 20650-20750 - ICICI Securities

Rollover Analysis - Sept 20: Selling climax on expiry as markets crumble - YES Securities

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

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

disclaimer copyright © 2005 - 2019