Earnings Update - TATA Motors(TTMT IN) - Results better than street expectations - CSEC Research

Results better than street expectations

- In 4QFY17, Tata Motors' consolidated revenue declined by 2.9% YoY to INR 772.2bn. On the standalone front company posted revenue of INR 150.9bn, up 6.6% YoY. M&HCV segment and LCV segment partially offset growth in Passenger vehicle segment. During the quarter company witnessed muted demand due to Demonetization, subdued freight demand from industrial segment and lower than expected pre-buying in CV segment.

- Consolidated EBITDA margin stood at 15.3%, on account of strong JLR performance and changes in accounting treatment for hedge losses. Adjusted consolidated net profit stood at INR 43.3bn (-26.6% YoY)

- Management indicated that JLR would start benefiting from a weak GBP from 4QFY18, as past hedges restrict the benefit for next three quarters. Company expects to launch E-Pace by Sept-18 and I-Pace by end- FY19. It will add XE and E-Pace production in China post CY18. Management is confident of meeting future emission norms, as it expects 50% of its portfolio to be hybrid/EV by 2020.

Valuation: At CMP, the stock is trading at P/E of 9.5X FY2019E. We maintain a BUY rating on the stock with a target price of INR 553 assigning the PE of 11X FY2019E.

Risks: Slowdown in the Chinese market, increase in commodity prices and interest rates.

Shares of TATA MOTORS LTD. was last trading in BSE at Rs.478.55 as compared to the previous close of Rs. 476.4. The total number of shares traded during the day was 375530 in over 5132 trades.

The stock hit an intraday high of Rs. 485.95 and intraday low of 477.5. The net turnover during the day was Rs. 181005492.

Source : Equity Bulls

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