Angel Broking has recommended 'Accumulate' on Tata Motors with a price target of Rs 319 in its report dated Dec. 17, 2012.
Tata Motors registered a 5.3% yoy (up 1.7% mom) decline in global wholesale volumes for November 2012 to 102,337 units. This can be attributed to the weak performance in the domestic passenger and medium and heavy commercial vehicle segments.
While, global commercial vehicle sales posted a decline of 1% yoy (4.2% mom); global passenger vehicle volumes fell sharply by 8.9% yoy.
Jaguar and Land Rover (JLR), however, posted a strong wholesale volume growth of 18.7% yoy (24.2% yoy) to 34,649 units which was ahead of our expectations of 28,500 units. Jaguar sales posted an impressive growth of 17.8% yoy (87.5% mom) led by dispatches of the model year 2013 models. During the month, JLR started the dispatches of the all-wheel-drive XF and XJ models to US and smaller engine versions of XF and XJ to China.
Land Rover sales too registered a strong growth of 18.9% yoy (15.6% mom) backed by strong growth in Evoque and Freelander sales. Land Rover sales benefitted from the start of the third shift at the Halewood plant which eased the production constraints for Evoque (11,000 units vs. 9,500 units in October 2012) and Freelander (5,000 units) models.
It retains positive view on JLR and expect a 12% volume CAGR over FY2012-14E driven by Evoque, new product launches (Range Rover, Range Rover Sport, XF and XJ) and continuous ramp-up in China. Further, favorable market and product-mix and stable commodity prices will help mitigate raw-material cost pressures.
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