Buy Tata Motors - Geojit BNP Paribas

Buy Tata Motors – TP Rs.360

- Tata Motors is rated to 'buy' with a target price of Rs.360 over one year. The stock is currently traded at Rs.300 range.

- Company's sales and profitability have increased nearly five-fold since its acquisition of Jaguar Land Rover (JLR) in 2008.

- High brand equity and the planned near doubling of investment commitment in JLR to GBP 1.5 billion per year over the next five years would help the company to sustain its double digit volume growth as well as earnings over FY12 – FY14.

- Company plans to launch over 40 models/ variants in the next five years, which will help diversify growth momentum. Currently, the company is largely dependent on the Range Rover Evoque model.

- Supported by new launches, high volume growth and better capacity utilization, EBITDA margin would remain above average level of 16 -17 up to FY14.

- The stock is likely to be re-rated in the market on improving cash flow and return on capital. This is expected despite the sharp rally witnessed in the stock year to date (YTD).

- JLR business is valued at a premium to peers in the luxury car segment to reflect the prospects of market share gains and higher earnings growth.

Source : Equity Bulls

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