TTMT' global sales remain weak; JLR sustained its strong growth in August 2013 - Angel Broking

Tata Motors' (TTMT) global sales continued its weak trend in August 2013, declining by 16.2% yoy (7% mom) to 81,457 units, led by the poor performance in the domestic passenger and commercial vehicle segments. While, global commercial vehicle sales posted a decline of 24.2% yoy; global passenger vehicle volumes declined by 7.8% yoy led by the 45.5% yoy decline in the domestic passenger vehicle volumes.

Jaguar and Land Rover (JLR) however, sustained its strong momentum witnessing a growth of 28.4% yoy to 30,895 units. The growth was led by the strong performance of the Jaguar and Land Rover models on the back of the success of the new launches and easing of capacity constraints. Jaguar continued its impressive run, posting a growth of 76.4% yoy to 5,222 units driven by the incremental volumes from the F-type and growth in the XF model led by the introduction of the Sportbrake, AWD and smaller engine variants. Land Rover sales too recorded a robust growth of 21.7% yoy to 25,673 units on the back of the dispatches of the new Range Rover Sport.

Going ahead, we expect headwinds in the standalone business to continue in FY2014 due to weak macro-economic environment which is expected to continue impacting domestic volumes. However, we expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market and aided further by the strong product launch pipeline and the success of the model launched in 4QFY2013. We expect JLR volumes to grow at ~13% CAGR during FY2013-15E and PAT to grow at ~15% CAGR during the same period.

While we retain our positive view on Tata Motors; post the sharp ~25% up move in the stock price over the last one month, we recommend a Neutral rating on the stock.

Source : Equity Bulls

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