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Tata Motors (Q3 FY13)

We revise our 9-month target price to Rs313 as we roll-over to FY15.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs296, Target Rs313, Upside 5.7%
  • Consolidated net sales grew by a muted 1.8% yoy as JLR sales grew by a modest 1.5% owing to pressure on realizations and standalone sales plummeted 20.3% yoy owing to sharp fall in M&HCV volumes
  • JLR OPM was at 14% was lower than ours and street estimates, a fall of 303bps yoy; the fall was driven by higher marketing spends, increase in employee costs and adverse currency movements
  • OPM for standalone business at 1.4% was much lower than our expectation mainly on adverse product mix
  • Volumes at JLR to improve in Q4 FY13 as deliveries of new Range Rover continue to ramp up
  • Company has raised its guidance of capital expenditure at JLR from £2bn per annum to about £2.75bn
  • Maintain Market Performer rating but revise earnings and target to factor in lower margins at JLR. Raise our 9-month price target to Rs313 as we rollover to FY15
Result table (Consolidated)
(Rs m) Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Net sales 460,895 452,603 1.8 434,029 6.2
Material costs (269,658) (270,956) (0.5) (246,775) 9.3
Purchases (27,055) (28,988) (6.7) (30,438) (11.1)
Personnel costs (43,529) (32,072) 35.7 (40,191) 8.3
Other overheads (59,214) (48,360) 22.4 (58,015) 2.1
Operating profit 61,438 72,227 (14.9) 58,611 4.8
OPM (%) 13.3 16.0 (263) bps 13.5 (17) bps
Depreciation (20,700) (16,159) 28.1 (15,944) 29.8
Product development (4,865) (3,957) 22.9 (5,274) (7.8)
Interest (9,346) (5,769) 62.0 (8,474) 10.3
Other income 1,886 240 685.0 2,068 (8.8)
PBT 28,414 46,581 (39.0) 30,987 (8.3)
Tax (10,318) (10,711) (3.7) (9,876) 4.5
Effective tax rate (%) 36.3 23.0
31.9
Other provisions (85) (172) (50.4) (262) (67.6)
Adjusted PAT 18,010 35,699 (49.5) 20,848 (13.6)
Adj. PAT margin (%) 3.9 7.9 (398) bps 4.8 (90) bps
Extra ordinary items (1,735) (1,643) 5.6 (101) 1,618.1
Reported PAT 16,275 34,056 (52.2) 20,747 (21.6)
Ann. EPS (Rs) 20.4 42.9 (52.5) 26.0 (21.6)
Source: Company, India Infoline Research

Cost analysis (Consolidated)
As a % of net sales Q3 FY13 Q3 FY12 bps yoy Q2 FY13 bps qoq
Material costs 58.5 59.9 (136) 56.9 165
Purchases 5.9 6.4 (53) 7.0 (114)
Personnel Costs 9.4 7.1 236 9.3 18
Other overheads 12.8 10.7 216 13.4 (52)
Total costs 86.7 84.0 263 86.5 17
Source: Company, India Infoline Research

JLR results table
(in £ mn) Q3 FY13 Q3 FY12 yoy (%) Q2 FY13 qoq (%)
Jaguar wholesale volumes 11,980 13,006 (7.9) 12,798 (6.4)
Land Rover wholesale volumes 76,678 65,287 17.4 71,951 6.6
Total wholesale volumes 88,658 78,293 13.2 84,749 4.6
Realization (£/vehicle) 42,906 47,884 (10.4) 38,797 10.6
Net Sales 3,804 3,749 1.5 3,288 15.7
Expenses (3,271) (3,110) 5.2 (2,802) 16.7
Operating profit 533 639 (16.6) 486 9.7
OPM (%) 14.0 17.0 (303)bps 14.8 (77)bps
Depreciation (169) (136) 24.3 (119) 42.0
forex gain/(loss) 11 14 (21.4) 67 (83.6)
EBIT 375 517 (27.5) 434 (13.6)
Interest expense 29 (8) - (3) -
PBT 404 509 (20.6) 431 (6.3)
Tax (108) (116)
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