Tata Motors - JLR Margin Surprises - ENAM Direct

Tata Motors' (TTMT's) Q2 operating performance was above our expectations driven by JLR (EBIDTA at GBP 486 mn vs. our est. of 459 mn). However, standalone business continued to disappoint (recurring PBT loss of Rs 260 mn) due to higher discounts. While consolidated EBITDA was up 18.4% YoY (vs. our est. of 15% YoY), net profit at Rs 21 bn was below our estimate due to (1) lower JLR profit under Indian GAAP (treatment of forex) by GBP 54 mn and (2) write down of assets in subsidiary.

We expect JLR's growth momentum to continue driven by improving product mix (launch of new RR and XF Sportsbrake; introduction of XF-2 litre petrol options in China; lower discounts). Maintain BUY with SOTP-based TP of Rs 313.

Source : Equity Bulls

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