Tata Motors (BUY): JLR saves the day once again - AMBIT

Tata Motors' 1QFY14 consolidated performance exceeded our expectations owing to a strong revenue and margin performance at Jaguar Land Rover (JLR). However, the consolidated net earnings performance was impacted by significantly higher-than-expected tax expenses. While the working capital performance deteriorated in JLR, it is mainly attributable to an inventory build-up for the launch of the new Range Rover Sport. Going forward, the new launches and well-diversified growth profile should help mitigate the potential growth slowdown in the China market and enable JLR to meet our FY14 volume growth estimate of 12%. Furthermore, given the 1QFY14 margin performance (at 16.5%), continuing favourable currency trends so far in 2QFY14 and softening commodity prices, our FY14 EBITDA margin estimate (currently at 15.7%) for JLR may require an upward revision. In contrast to our outlook on JLR, we remain skeptical of the performance of the domestic business.

Source : Equity Bulls

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