Maintain Buy on Tata Motors - Below Estimates - Motilal Oswal

TATA MOTORS: Below estimates; Volumes grew 1% YoY (~16% MoM decline) to 54,622 units; Buy

- Total volumes grew by just 1% YoY (~15.7% MoM decline) to 54,622 units (v/s est 64,500 units), impacted by 34% YoY decline in car volumes.

- CV portfolio grew by 20% YoY. M&HCV's volumes grew by 16% YoY, whereas LCV volumes grew by 22% YoY.

- Car volumes de-grew by 35% YoY, impacted by very low Nano sales at just 509 units, 37% YoY decline in Indica range and muted Indigo range.

- UV volumes continue to recover with growth of 40% YoY (~7% MoM decline) to 3,175 units. Volumes will see boost from recently launched Aria.

- Underlying demand remains strong, especially in CV segment due to higher freight availability as economic growth picks-up.

- We have downgraded our volume estimates for FY11 and FY12, translating into downgrade of 2.1% for FY11 consol EPS to Rs129.5 and 1.7% downgrade in FY12 consol EPS to Rs148.2. Our estimates now factors in for 20% volume growth, implying residual monthly run rate of 74,976 units. The stock trades at 8.7x FY12E consolidated EPS and 13.2x FY12E normalized consolidated EPS (adj for R&D capitalization). Maintain Buy.

Source : Equity Bulls

Keywords