JLR registers better-than-expected growth in retail sales in December 2013 - Angel Broking

JLR recorded strong growth in retail sales, posting a better-than-expected growth of 21% yoy (8.6% mom) to 40,635 units. The performance continues to be driven by strong momentum in the newly launched models with sustained growth traction across the world markets, especially in China, Rest of the World and North America. Jaguar sales maintained its strong run, posting a growth of 41.3% yoy (11.8% mom) to 6,981 units led by the strong growth in the XF and XJ models and aided further by incremental sales from the F type model. LandRover sales too recorded a strong growth of 17.5% yoy (8% mom) to 33,654 units driven by healthy growth traction in Range Rover Evoque and ramp-up in the dispatches of the new Range Rover and the Range Rover Sport. Going ahead, we expect headwinds in the standalone business to continue in FY2014 due to weak macroeconomic environment, which is expected to continue impacting domestic volumes.

Nevertheless, we expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market, success of the recently launched models and strong product launch pipeline. We are building in an ~13% volume CAGR for JLR with an EBITDA margin improvement of 170bp over FY2013-15E, driven by superior product mix and favorable geography mix. We retain our positive view on TTMT and maintain our Accumulate rating on the stock with a SOTP target price of Rs. 419.

Source : Equity Bulls

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