2026-03-16 21:36:42
Latest Post
AVI Polymers Launches AVI Waste Management Private Limited to Develop AI-Based Carbon Credit and Sustainability Systems for SMEs and Startups
Cupid Breweries and Distilleries Ltd inks agreement with Bansal Udyog Pvt Ltd for West Bengal foray
Bajaj Electricals acquires Morphy Richards Brand Rights in India and Neighbouring Markets for ₹141.4 Crores
Nucleus Software appoints Mrs. Yasmin Javeri Krishan as Chairperson
Reliance Industries signs Green Ammonia offtake agreement with Samsung C&T
Research
Tata Motors - Karvy
Posted On : 2012-06-04 11:02:05( TIMEZONE : IST )
Tax credit inflates reported net profit, but margins under pressure; Maintain BUY
Tata Motors has reported disappointing performance on margins front in Q4FY12, particularly sequential decline in JLR business, despite recording strong volume growth both on QoQ and YoY basis. Though the Company's consolidated reported profit seems to be very high - mainly due to tax credit to the tune of Rs. 18 bn - after adjusting tax benefit and assuming Company's normal tax payment, our adjusted consolidated PAT stands at Rs. 35.4 bn in Q4FY12, as against Rs. 62.3 bn reported net profit. Its EBITDA margins came lower due to higher sales expenses as well as poor product mix, as Evoque is low margin product. The Company's standalone performance improved over sequentially as well as on YoY basis. We have not factored in any tax credit effect on estimated financials.
The net revenue at JLR rose 51% YoY (up 10.5% QoQ) to £4.1 bn in Q4FY12. Its EBITDA margin expanded 202 bps YoY, while declining by 251 bps sequentially to 15.7% in the reporting quarter, mainly due to poor product mix, change of geographical mix, coupled with seasonal effect to some extent. Its reported PAT stood around £696 mn, due to tax credit of £217 mn in the quarter. The Company's Management plans to spend £2 bn annual capex for JLR in addition to standalone capex of Rs. 31 bn in FY13. The Company also plans to invest in product development and technology to take on the competition for its luxury car business by launching new products at regular interval from JLR platform.
Outlook & Valuation
We estimate Tata Motors to record consolidated EPS of Rs. 41.8 on revenues of Rs. 1,905 bn in FY13E. For FY14E, we introduce our EPS estimates of Rs. 45.4 and revenues of Rs. 2,120 bn. The stock currently trades at P/E of 4.9x FY14E and EV/EBIDTA of 3.1xFY14E. We value Tata Motors on SOTP basis. Its standalone business is valued at Rs. 66 per share and JLR at Rs. 261 per share, based on FY14E EBITDA. Moreover, other subsidiaries are valued at Rs. 17 per share, and we have included a net debt discount of Rs. 39 per share. Accordingly, we maintain our "BUY" recommendation on the stock with price target of Rs. 305 per share.
