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Tata Motors skids on lower-than-forecast margins
Tata Motors shares have taken a beating in opening trades after reporting a 30 basis points decline in EBIDTA margins for Q4 FY12 to 14.3%. The market expected a jump of over 100 basis points.
JLR contributed about 95% of the Q4 profits of Tata Motors.
Tata Motors also said that Q4 net profit also included tax credit of ~ Rs 18bn.
Tata Motor’s standalone profit after tax (PAT) for Q4 FY12 declined by 1.4% to Rs 5.65bn. For FY12, Tata Motors' net profit was down 31.4% at Rs 12.42bn.
Tata Motors' stock fell as much as 8.7% to Rs 251.80. It was last trading at Rs 254.45, down Rs 21.45 or 7.8%. Around 1.76mn shares changed hands on BSE versus the two-week average of 1.46mn shares.
On April 12 this year, the stock hit a 52-week high of Rs 320.60.
Tata Motors DVR too slipped.
"Tata Motors’ Q4 results were significantly below estimates. JLR’s Indian GAAP EBITDA margin contracted 600bp QoQ to 14%, making the 20% margin reported in Q3 seem an aberration," says IIFL in a research note to its clients.
"Domestic margins were better than expected. However, the recent slowdown in truck sales may cap improvement in the domestic business," IIFL adds.
IIFL has cut its EPS estimate by 6-7% on lower JLR margins and Target Price to Rs 300 from Rs 330.
Jefferies has cut its price target on Tata Motors by ~10% to Rs 326 from Rs 361 but has kept a 'buy' rating on the stock citing strength in the core JLR business.
JLR’s margins disappointed due to poorer mix and high marketing costs, says Jefferies.
Near-term outlook for domestic margins remains weak as steep price increases in truck prices have hurt demand, Jefferies said in a report.
Meanwhile, UBS has cut its 12-month price target for Tata Motors to Rs 270 from Rs 320, maintaining its "sell" rating after the company's weaker-than-expected operating earnings.
UBS believes that volume growth for Jaguar Land Rover could incrementally disappoint.
The Swiss investment bank adds that domestic sales growth remains at risk due to India's weak economic outlook and increasing competition.
Keshub Mahindra to retire as Chairman of M&M
Keshub Mahindra, Chairman of Mahindra & Mahindra Ltd., advised the Board of his intention to retire from the Board at the conclusion of the forthcoming Annual General Body Meeting scheduled on August 8, 2012.
The Board reluctantly acceded to the Chairman’s desire but requested him to accept the position of Chairman Emeritus, emphasizing that the Company required his advice and counsel.
Keshub Mahindra joined the Board of the Company in 1948 and was elected Chairman in 1963. During the 48 years of his Chairmanship, the Mahindra Group grew from a manufacturer of automobiles to a federation of companies operating in a range of businesses which includes automobiles, tractors, auto components, I.T., real estate, financial services and hospitality. Over the years he successfully created business alliances with global majors such as the Willys Corporation, Mitsubishi, International Harvester, United Technologies, British Telecom and many others, laying the foundation for the emergence of the Group as an Indian multi-national. In addition, he built a team of leaders who were not only recognized as outstanding professionals but were also dedicated to the highest standards of business ethics and corporate governance.
The Board expressed its deep gratitude to Keshub Mahindra for the outstanding services rendered by him not only to the Mahindra Group, but also to industry and to the nation, over a period that spanned the early post-independence era, the Licence Raj and the two decades of liberalization and globalization. During this entire period the Group never deviated from its core values and code of ethics.
Even before the buzz word of Corporate Social Responsibility came into vogue in the corporate world, the Mahindra Group quietly and unobtrusively developed a high sense of service to the community on a wide range of social issues with special emphasis on education for the girl child and youth from the underprivileged sections of society.
During the course of his long and illustrious career, Mr. Keshub Mahindra served on a large number of Boards and Councils in both private and public domain. He was the founder Chairman of HUDCO, served on many Corporate Boards including SAIL, Tata Steel, Tata Chemicals, Indian Hotels, IFC, ICICI and HDFC, and held the position of President ASSOCHAM, the Employers' Federation of India and the Bombay Chamber of Commerce and Industry. He was a Member of the Sachar Commission on Company Law and Reforms, a Member of the Prime Minister's Council on Trade and Industry and Chairman of the Indian Institute of Management, Ahmedabad.
He was the recipient of many national and international awards such as the Chevalier de la Legion D’honneur bestowed on him by the Government of France, Businessman of the Year from Business India, the Jehangir Ghandy Medal for Industrial Peace from XLRI, Life-time Achievement Award for Excellence in Corporate Governance from the Institute of Company Secretaries and Life-time Achievement Awards from AIMA, CNBC TV18, ACMA and The Economic Times.
The Board unanimously appointed Anand Mahindra as Chairman & Managing Director with effect from the conclusion of the forthcoming Annual General Body Meeting scheduled on August 8, 2012.
Agreeing to accept the position of Chairman Emeritus, Keshub Mahindra, said, "I am deeply touched by this gesture of the Board, whose wisdom has guided me and the Company over the years, and whose trust and friendship have enriched me personally. I also take this opportunity to express my gratitude for the abundant love and affection always shown to me by our employees and shareholders.
It is gratifying to be able to hand over to the next generation at a time when the company’s performance is at its best. I am confident that Anand will retain and strengthen the values and principles that the Mahindras have stood for in the last six decades, and the Group will continue to grow its leadership position across its various businesses.”
Anand Mahindra said, “Keshub Mahindra has been a role model for business leaders and a true Statesman. He has built an organization that cares and is known for its ethics and social responsibility, and has shown by example how one remains steadfast in turbulence and navigates in crisis without sacrificing ethics and values.
I have had the privilege to work with Mr. Keshub Mahindra for the last twenty one years and will do my best to uphold the highest standards he had set for himself as Chairman. I am glad he has agreed to accept the position of Chairman Emeritus and I look forward to the benefit of his advice and guidance as we move ahead.”
Infocus News
IIFL recommends 'Buy'' on Mahindra & Mahindra
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Buy ” Mahindra & Mahindra .
According to IIFL report, M&M’s merger with Mahindra Automobile Distributors (MADPL), its low-margin 100% subsidiary that distributes Verito, resulted in 4Q revenue being inflated without any benefit at the Ebitda level. Although this resulted in a sharp margin contraction, absolute Ebitda and PAT (excluding exceptional gains of Rs2.6bn) came in line with our estimate. The management has proposed dividend of Rs12.5/share (yield ~2%).
4Q revenue grew 38.5% YoY (27.6%, excl. the impact of merger). Ebitda margin contracted 240bp YoY and 140bp QoQ. We estimate half of the QoQ margin contraction is due to an unfavourable product mix and the remaining is attributable to the margin-dilutive merger.
Ebit margin of the auto segment (excl. Rs1.1bn exceptional gain) was at 7.1%, down 110bp QoQ. The farm equipment margin was flat QoQ.
We largely maintain our Eps estimates for FY13 and FY14 with a cut in tractor volumes offset by higher auto volumes. We cut our TP from Rs. 830 to Rs. 800 as we remove the Rs30 option value we had assigned to the benefit arising from a potential reversal of the Maharashtra VAT notification, brokerage added.
The report was published by IIFL’s Institutional Equities Research desk.
Mr. A. Ramasubramanian, President, Asia Motor Works Limited
Domestic News
Toyota Financial Services enters Indian market
Toyota Financial Services a wholly owned subsidiary of Japanese automobile giant Toyota Motor Corporation today announced the launch of its services here in India. Headquartered in Bangalore, Toyota Financial Services India (TFSIN), now a RBI licensed* non-banking finance set up, will provide auto finance for Toyota vehicle buyers.
Toyota Financial Services began its operations in Australia in 1982 and has grown to be a company that currently employs approximately 8,400 employees worldwide with assets in excess of $150bn. The company has a global footprint in 33 countries and enters India with an investment of INR 2600 Mn. TFSIN’s core objective is to support Toyota sales in India through its knowledge and specialty in the auto finance industry and will bring forth innovative products and services to Toyota customers.
Kazuki Ogura, MD & CEO, Toyota Financial Services India Ltd. said “We are extremely happy to be in India. The Indian automobile industry is destined to be one of largest in the world. This calls for special attention to our customers to whom we will offer unique finance services through highly trained and qualified Finance Executives at each Toyota dealership. Our objective is to provide Toyota customers with the best auto finance in the market.”
Hiroshi Nakagawa, MD, Toyota Kirloskar Motor who was also at the launch said, “We welcome Toyota Financial Services in India which would further strengthen our brand and would help us come closer to our customer by fulfilling their financial needs. TFSIN has tremendous potential and would work like a catalyst in the growth of Toyota in India”.
TFSIN will commence operations through Toyota dealerships in Bangalore and New Delhi followed by a phased launch across India. Every Toyota dealer outlet will have a dedicated finance executive who ensures the customer gets the best finance deal. Apart from dedicated service, the company will offer several unique products such as TFS smart, extended tenor and 100% finance which have been specifically designed to provide ease to Toyota customers.
Kazuki Ogura further added “We have put a lot of effort to ensure our customers have a quick and smooth process while purchasing their Toyota car. From an industry best 8 hour loan approval, to easy documentation, to customized solutions, our global experience and understanding of the auto finance industry precedes us and we will put our best efforts forward to ensure a happier Toyota customer”.
Sandeep Singh, DMD (Marketing), Toyota Kirloskar Motor said “Toyota’s objective is to understand the financial needs of all potential customers and ensure that these financial needs are fulfilled through our financial associates. TKM has always shared a very good rapport with all our financial partners and we are confident that TFSIN will further help us in our efforts to provide customer delight in owning and driving a Toyota”.
Toyota Group commenced its financial services with an objective to provide customers with a loan facility to acquire vehicles, to support Toyota Group’s revenue and to contribute to the sales promotion of products offered by Toyota.
Yamaha set to kick-start YZF R15 One Make Race Championship 2012
Riding on its success for the last two years, India Yamaha Motor is back with the third edition of YZF-R15 One Make Race Championship at the Kari Motor Speedway, Coimbatore with Round I commencing from 1st June, 2012. This championship will be followed by 5 rounds and will conclude on 30th September 2012. The racing event is being organized in association with the Madras Motor Sports Club (MMSC) and the Federation of Motor Sports Clubs of India (FMSCI) and is a part of the Indian National Racing Championship 2012.
The race will be held in two categories – Novice and Open. The qualifying rounds for the Novice category will be held on 1st June, 2012 and for the Open category it is scheduled on 2nd June, 2012. The top 15 participants in the qualifying rounds of both Novice & Open category will participate in two races of their respective category on the next day.
The contestants will hit the track on Yamaha’s Super Sports YZF- R15 version 2.0 and experience the breathtaking acceleration of the bike on the race circuit. Loaded with true Yamaha racing DNA, YZF- R15 will provide a complete racing experience to the biking aficionados and hands on feel of its power, stability, cornering and braking. Yamaha will make their experience more exciting by fitting Daytona Racing Kits in the bikes. These kits are developed using valuable experience gained from MotoGP & World Superbike racing and are designed exclusively for racing purposes in a closed circuit.
The winners of the R15 One make Race championship 2012 will be representing India Yamaha Motor at the Yamaha ASEAN Cup 2012 to be held later this year.
Commenting on the occasion, Jun Nakata, Director - Sales and Marketing, India Yamaha Motor said, “We are happy to be back with our annual racing event which all the racing enthusiasts eagerly look forward to. This is a great opportunity for them to hone and display their skills in motorcycle racing. We have already organized this year’s Riding Clinic which proved to be very helpful for the racers most of whom would be seen participating in the R15 One Make race as well. The idea behind conducting such riding events is to identify and nurture talent in India that will one day be capable of representing India at the MotoGP races.”
“I would also like to extend my best wishes to S Shankar and Dinesh Kumar, the winners from last year’s R15 One Make Race championship 2011. They will be representing us at The SUGO Race in Japan in June this year.”
The technology in YZF-R15 has percolated from R1 (Deltabox frame/Fuel Injection/6 speed gearbox/styling/Liquid Cooled 4V engine). Just like R1, it is light weight, has power on demand, besides having centralized mass, stopping power, aerodynamics, ergonomics and stability/rigidity, among others. It also has the controllability and maneuverability to maximize riding/cornering/braking performance.
Yamaha’s corporate culture has always given special importance to bike racing in India as a way of expressing the ‘spirit of challenge’ that it values so highly. Their racing endeavors, the R15 Championship which is one of the biggest initiatives by Yamaha to take racing culture to new heights in India has proved to be very successful in its aim to inculcate the racing spirit as well as promote safe biking culture in the country.
Ford India May sales steady
SKF expands Vehicle Parts Center at Pune
Honda eyes car exports from India
Cyrus Mistry inducted to Tata Motors Board
Three TN districts run out of auto fuels
Tata Motors forays into Myanmar market
Mahindra XUV 500 to open All India bookings from 8th June 2012
Maruti Suzuki India begins Maruti Suzuki-Autocar Young Driver contest
Motherson Sumi Q4 cons net profit at Rs1948.30 mn
Swift and Wagon R bag I-mark for 2012
JLR may start manufacturing vehicles in India: report
Suzuki Motorcycle launches mass segment motorcycle the Hayate
M&M plans to launch six new models in FY13
Audi India appoints Niraj Srivastava as Head of Sales
Nabil Jeffri takes pole in JK Racing Asia Series Season Opener
Maruti Suzuki begins fresh round of safe driving competition
Calling for entries for season two of Volvo Sustainable Mobility Award 2012
Tata Motors May sales up 4% YoY
Maruti Suzuki May sales down 5% YoY
Mahindra Auto sales rise 28% in May
Hero MotoCorp May sales up 11.3% YoY
TVS Motor May sales fall ~5% yoy
Mahindra Tractor sales flat in May
Toyota Kirloskar Motor May sales up 108% YoY
Hyundai Motor sales up 17% in May
Suzuki Motorcycle sales up 22% in May
Honda Siel Cars India records a growth of 343 % in May 2012
Corporate News
Bharat Forge Q4 net profit dips 45%
Bharat Forge Ltd. has posted a net profit of Rs. 551.20mn for the quarter ended March 31, 2012 compared to Rs. 1006.50mn for the quarter ended March 31, 2011.
Total Income has increased from Rs. 8374.90mn for the quarter ended March 31, 2011 to Rs. 9916.10 mn for the quarter ended March 31, 2012.
EPS stood at Rs. 2.36 versus Rs. 4.23 in the year ago period while total costs rose to Rs. 7.8bn from Rs. 6.72bn in the year ago.
The company had a one-time loss in Q4 at Rs. 704.2mn.
The Company has posted a net profit of Rs. 3620.70mn for the year ended March 31, 2012 as compared to Rs. 3108.30mn for the year ended March 31, 2011.
Total Income has increased from Rs. 29894.30mn for the year ended March 31, 2011 to Rs. 37520.80mn for the year ended March 31, 2012.
Tata Motors Q4 cons. net profit at Rs 62.34bn
M&M reports Q4 net profit of Rs 8.74bn
Global News
Jaguar is number one manufacturer in UK: J.D. Power survey
Jaguar has been announced as the Number One manufacturer in the J.D. Power and Associates/What Car? 2012 UK Vehicle Ownership Satisfaction Study (VOSS).
The study was based on the evaluations of nearly 18,000 individuals in the United Kingdom after an average of two years ownership. Every aspect of vehicle ownership was rated from performance, design and comfort to quality, reliability, cost of ownership, economy and dealer service satisfaction. The resulting data allowed the study to be the most comprehensive of its kind.
When split into model line-ups, the Jaguar XF finished second overall, a rise of 15 places within just 12-months.
The 2012 result marks the culmination of a steady rise in owner satisfaction, Jaguar having finished third in the 2011 survey.
J.D. Power’s media partner in the UK is What Car? Magazine. Its editor-in-chief, Chas Hallett, commented: ‘This is a great accolade for everyone at Jaguar. This study shows that customers are really satisfied with their Jaguars, a hugely important feat for any car maker.’
Adrian Hallmark, Global Brand Director, Jaguar Cars, commented: ‘It’s tremendous to have such customer recognition of our commitment to delivering quality, technology and a world-class ownership experience. This is a huge accomplishment and a tremendous honour to achieve the Number One spot. Now we’re at this point, we will work with even greater energy to sustain this performance.’
Grant McPherson, Director of Operations, Jaguar Castle Bromwich, commented: ‘Every member of the Castle Bromwich team, including our suppliers, aims to exceed the expectations of our customers. This Award is fitting recognition of their outstanding efforts over the years. Quality is at the heart of the Jaguar manufacturing process and it’s encouraging to see we are headed in the right direction. We will continue to apply our focus on improvement and delivering premium quality products as we look ahead to the next Jaguar models to come onto the market, including the new XF Sportbrake and F-TYPE.’
Jaguar continues to perform strongly in India, with an increase of over 140 per cent in Fiscal Year 2011/12.
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