Maintain 'buy' on Tata Motors - TP Rs.320 - Geojit BNP Paribas Financial Services

- Buy rating on Tata Motors is maintained with a new target price of Rs.320 over one year. Target price earlier was Rs.375.

- It is expected that growth outlook may remain healthy despite tough global macros.

- Macro challenges in Europe, China and weaker than expected margins have resulted in an average15% cut to the earnings estimates for FY13-14.

- However, company's business fundamentals remain good and it is expected that JLR to achieve volume growth of 15% and EBITDA growth of 19% for FY12-14. This is reasonably attractive when compared to peers.

- Premium SUV (sports utility vehicles) growth of 25% plus and top billing in UK and US customers surveys and strong innovation pipeline ( including the planned launch of Range Rover late this year) would keep the company's growth high for the SUV portfolio.

- Also, there is significant scope for expansion in non-European markets while pricing trends for premium cars look rational.

- Poor margin performance in 4QFY12 and macro challenges appear largely priced in.

- Healthy growth trends as seen in May 2012, steady operating margin performance and improvement in global sentiments would drive the stock performance.

Source : Equity Bulls

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