11 July 2020
Update
| Sector:
Automobiles
Tata Motors
BSE SENSEX
36,594
S&P CNX
10,768
CMP: INR108
TP: INR126 (+17%)
Buy
JLR – Wholesales decline 44.8% in 1QFY21
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
TTMT IN
3,598
353.8 / 4.7
202 / 64
-10/-33/-24
7000
57.6
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Financials Snapshot (INR b)
Y/E March
2020 2021E
Net Sales
2,611 2,499
EBITDA
239.1 208.4
Adj. PAT
-90.9 -115.0
Adj. EPS (INR)
-25.3
-32.0
EPS Gr. (%)
NA
NA
BV/Sh. (INR)
175.3 143.3
Ratios
Net D/E (x)
1.6
1.9
RoE (%)
-14.8
-20.1
RoCE (%)
3.7
-0.3
Payout (%)
0.0
0.0
Valuations
P/E (x)
NA
NA
P/BV (x)
0.6
0.7
EV/EBITDA (x)
3.7
5.2
Div. Yield (%)
0.0
0.0
FCF Yield (%)
-8.2
-46.9
Shareholding pattern (%)
As On
Mar-20 Dec-19
Promoter
42.4
42.4
DII
13.6
15.1
FII
16.8
18.3
Others
27.2
24.2
FII Includes depository receipts
2022E
2,913
381.5
8.3
2.2
NA
143.6
1.8
1.6
1.5
0.0
NA
0.7
2.7
0.0
17.2
Mar-19
38.4
16.3
19.1
26.2
CJLR wholesales grow by 15%, reflecting robust recovery
Jaguar Land Rover (JLR)’s wholesale volumes declined 44.8% YoY to ~65.4k
units (v/s est.: ~49k) in 1QFY21, whereas volumes for the China JV grew
~15% YoY at ~16.5k units.
Jaguar volumes fell ~54% YoY to ~18k units (our estimate: 15.6k), whereas
Land Rover (LR) volumes contracted ~40% YoY to ~47.5k units (our estimate:
33.4k).
JLR’s 1QFY21 retail sales declined ~42% YoY to ~74k, with LR decreasing
~38% and Jaguar ~52.5%.
Jun’20 retail sales fell ~25% YoY to 35.3k. This was the first month of retail
for many markets, such as the UK. In Jun’20, China (-7.4% YoY) and North
America (+2.2% YoY) were particularly encouraging. UK sales were down
31.8%, EU sales 52.5%, and RoW sales 33.1%.
Over 95% of JLR’s retailers worldwide have totally/partially restarted their
operations by now; moreover, all of the company’s plants have resumed
manufacturing, with the exception of the Castle Bromwich facility, which
would gradually start up again in August. All plants are operating on single
shifts, with social distancing measures in place and production ramping up
as demand increases.
Post the resumption of operations, the Range Rover Sport, the new Range
Rover Evoque, and the Land Rover Discovery Sport emerged as the best-
selling vehicles. Customer response to the new Land Rover Defender has
been overwhelmingly positive, and as retailers have come back on line,
there has been a surge of interest in the Land Rover. Deliveries for the
Defender have started to ramp up in the quarter, with 1,970 vehicles sold in
June. This has come after operations only just resuming in the UK/Europe
(May) and the US (June); China operations are scheduled to begin in July.
JLR ended 1QFY21 with a stronger-than-expected cash position of nearly
£2.7b (unaudited) and overall liquidity of around £4.6b, including the
company’s £1.9b revolving credit facility, which remains undrawn.
Mr Felix Brautigam, Chief Commercial Officer, Jaguar Land Rover, stated,
“While the COVID-19 pandemic continues to impact the global Auto
industry, we are pleased to see initial green shoots of recovery. We are
working alongside our retailers, planning for gradual recovery as lockdowns
relax and economies respond. Through the quarter, we continued to
introduce new and updated Jaguar and Land Rover vehicles to very positive
response.”
The stock trades at 2.7x FY22 EV/EBITDA and 0.7x P/BV. Maintain Buy, with
TP of ~INR126 (Jun’22-based SOTP).
Jinesh Gandhi – Research Analyst
(Jinesh@MotilalOswal.com)
Vipul Agrawal – Research Analyst
(Vipul.Agrawal@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.