Tata Motors stock price target is Rs572 by Angel Broking
Date: 28 October 2009
Contributed by Angel Broking
View information about Tata Motors: news, researches and price targets.
By Vaishali Jajoo, Shreya Gaunekar (Angel Broking)
Performance Highlights
- Net Sales, Profit spurt on decent Volumes and fall in Raw Material cost: For 2QFY2010, Tata Motors (TML) reported 12.7% yoy growth in Net Sales to Rs7,978.8cr (Rs7,029.3), which was better than our expectation of Rs7,842.6cr. Top-line was primarily driven by the 12.3% yoy growth in Volumes. The company reported Net Profit of Rs729.1cr (Rs347cr), which was substantially above our expectation of Rs479.5cr, mainly due to significant improvement in OPM, aided by the decline in Raw Material cost.
- Margins surge on lower Raw Material cost, improved Operating Leverage: During 2QFY2010, EBITDA Margins spiked by 575bp yoy owing to lower Raw Material costs. The Raw Material costs dipped by 975bp primarily with the raw material contracts getting negotiated amidst a cooled prices environment. However, considering hardening of commodity prices, management has guided on pressure on its Margins, which peaked in the quarter. The company has also managed to maintain its cost structure without excessive pressure with Other expenditure and Staff cost increasing marginally. Overall, reporting peak Margins for the quarter, TML reported a substantial 100% yoy jump in Operating Profits to Rs1,050.3cr (Rs525.1cr).
- Net Profit spikes 110.1% on improved Operating performance: The company reported Net Profit of Rs729.1cr (Rs347cr) for the quarter, which was substantially above our expectation of Rs479.5cr, mainly due to a substantial improvement in OPM. However, higher Interest cost of Rs285.6cr (Rs148.3cr) and Depreciation of Rs263.4cr (Rs202.9cr) on the back of investments crowding specifically in the past few quarters restricted further pump up in Net Profits.
- Industry showing signs of recovery: TML reported 12.3% yoy growth in total Volumes, where total commercial vehicle (CV) Volumes recorded 13.9% yoy growth and passenger vehicle (PV) Volumes registered 9.5% yoy growth for the quarter. Exports continued in negative zone (38% de-growth for the quarter). However, with every passing month, the dip in volumes is reducing and giving signals of an impending recovery in volumes. The volume growth of the company in the domestic market was influenced by a 19.6% rise in the light commercial vehicle (LCV) Segment driven mainly by growth in ACE Truck and success of ACE Magic and Winger. Consequently, TML gained market share both in the medium and heavy commercial vehicle (MHCV, 63.5%) and LCV (66.8%) Segments.
Conference Call ? Key Highlights
- Management indicated that the positive measures taken by the government on lowering Excise Duty and Interest rates would benefit overall industry to come out from the slowdown witnessed in FY2009. The company is hopeful of a slow but steady recovery in volumes going forward aided by an improving economic scenario and stabilising freight rates.
- The domestic CV industry registered 10.4% growth in Volumes, while TML?s Volumes grew 16.3%. The domestic M&HCV Segment declined by 1%, while TML?s Volumes grew 5%. Further, while the domestic LCV Segment clocked a robust 27% growth, TML?s Volumes increased 33%. The M&HCV Truck Segment registered 1.4% growth after a long hiatus with declines of around 40%, 65% and 59% in 1QFY2010, 3QFY2009 and 4QFY2009, respectively. The M&HCV Bus Segment Volumes declined by 15.3%, while TML Volumes grew by 8.7% on the back of good orders from STUs, with guidance on further growth in the Bus Segment particularly with an order of 5,000 buses to be executed in FY2010 under the JNNURM scheme. The company passed on hardened commodity prices in form of price increase in the CV Segment to the extent of 8-9% in FY2009 and around 1.5% in 2QFY2010.
- The PV industry registered 23% growth driven primarily by product interventions by incumbents, finance availability and pre-festive season buying. The Indica Vista continued its strong performance in the Small Car Segment, however its market share declined to 10.3% (11.7%) in 2QFY2010. The company commenced Nano deliveries during the current quarter. To-date, it has delivered around 7,506 vehicles. During 1HFY2010, the company sold 8,165 Fiat vehicles registering substantial growth of 690% mainly driven by Grande Punto and Linea. Competitive intensity and anticipation of the new Indigo sedan led to a decline in market share of the entry-level midsize segment, from 21.9% to 15%. The quarter also saw launch of the new Indigo ?Manza? to revive growth in the entry-midsize segment. Jaguar and Land Rover vehicles continue to maintain strong order book. Utility vehicles (UVs) face considerable competition from the segment leaders, and renewed efforts are in place to grow in 2HFY2010E.
- The key export markets have been impacted by poor economic conditions and contraction in liquidity. The company?s Export Volumes fell 38% during 2QFY2010 due to market contraction in most prime export markets. However, the North and East regions have shown some signs of stability, while the West and the South continue to remain weak.
- The company?s Inventory days increased marginally to 33 days in 2QFY2010 from 32 days in 1QFY2010 mainly due to improving production levels.
- Net Debt at the end of 2QFY2010 stood at Rs18,600cr (Rs16,954cr in1QFY2010). Debtor days increased to 21 days (18 days) during quarter. The company successfully raised funds through GDR and FCCN Issues in October 2009 to repay its original bridge loan of US $3bn, which was availed to finance the acquisition of Jaguar Land Rover via various modes of fund raising including the Divestments in Tata Steel, Rights Issues, Issuance of Bonds. The company is committed to reducing its leverage through divestments, internal accruals and capital raising at the appropriate time.
- TML hopes to clock better FY2010E results on the back of softening Interest rates, reduced commodity costs and incentives announced by the government for the CV Sector in the last couple of months. The company has also embarked on an extensive cost-reduction program, targeting an overall cost reduction of Rs1,000cr over the next three years.
- TML?s Vehicle Finance Division accounts for a substantial part of its total vehicle business. The Division?s Book size in 2QFY2010 stood at Rs8,200cr, of which Rs1,500cr is in TML?s books and Rs6,700cr is in subsidiary, TMFL. Disbursals in 2QFY2010 were Rs1,550cr (Rs1,984cr), down 21.9%.
- Capex Plans: TML incurred capex of around Rs3,500cr in FY2009 and Rs1,300cr in 1HFY2010. TML plans to incur additional capex of Rs2,500-3,000cr every year hereon, with a focus on product development. It is concentrating on new launches and considers this as a way of de-leveraging its product portfolio. TML is building new capacities at different plants and simultaneously working on six new (CV and PV) platforms. TML is now actively reviewing its capex plans due to the weakening demand environment. It does not envisage changing its product development plans, but is likely to postpone some of its capacity expansion plans.
Outlook and Valuation
We believe that FY2010 will be a year of recovery for TML?s standalone business, due to overall glimmers of improvement in economic parameters. The cut in Interest rates and overall improvement in the financing scenario are expected to help TML report better Volume growth in 2HFY2010. Our estimates for TML factor in 18% CAGR in CV Volumes over FY2009-11E. Following recovery in its core business, TML?s key subsidiaries (linked to the fortunes of CV industry) are also expected to show a good turnaround going forward. Further, with the positive trend in the external environment in financial markets and improvement in general liquidity, TML?s has partially met its overall funding requirements (including JLR) at reasonable terms. Further, full recovery in the domestic CV cycle in FY2011, is expected to reduce pressure on cash flows and facilitate debt repayment. However, JLR's key European and US markets have deteriorated materially in recent months, and are expected to remain weak at least over the next 2-3 quarters, which could continue to drag TML's consolidated performance for some time.
We estimate TML to record a Net Loss in FY2010E, but expect a recovery in FY2011E on a consolidated basis. At the CMP of Rs539, on a consolidated basis, the stock is trading at 18.7x FY2011E Earnings and 3.7x FY2011E P/BV. We believe that the JLR weakness will continue and is already known. Hence, we value the stock on the sum-of-the-parts (SOTP) methodology, and recommend Accumulate, with a Target Price of Rs572. We have valued the Core business at Rs510, which is 8x FY2011E EV/EBITDA and 13x FY2011 P/E. Our embedded value of the subsidiaries and investments in TML's books (including JLR) works out to Rs62 per share.
Disclamer: jeg købte 1. portion af aktien i marts 2009, og øgede positionen efter regnskabet igår.
Vh Hya
Date: 28 October 2009
Contributed by Angel Broking
View information about Tata Motors: news, researches and price targets.
By Vaishali Jajoo, Shreya Gaunekar (Angel Broking)
Performance Highlights
- Net Sales, Profit spurt on decent Volumes and fall in Raw Material cost: For 2QFY2010, Tata Motors (TML) reported 12.7% yoy growth in Net Sales to Rs7,978.8cr (Rs7,029.3), which was better than our expectation of Rs7,842.6cr. Top-line was primarily driven by the 12.3% yoy growth in Volumes. The company reported Net Profit of Rs729.1cr (Rs347cr), which was substantially above our expectation of Rs479.5cr, mainly due to significant improvement in OPM, aided by the decline in Raw Material cost.
- Margins surge on lower Raw Material cost, improved Operating Leverage: During 2QFY2010, EBITDA Margins spiked by 575bp yoy owing to lower Raw Material costs. The Raw Material costs dipped by 975bp primarily with the raw material contracts getting negotiated amidst a cooled prices environment. However, considering hardening of commodity prices, management has guided on pressure on its Margins, which peaked in the quarter. The company has also managed to maintain its cost structure without excessive pressure with Other expenditure and Staff cost increasing marginally. Overall, reporting peak Margins for the quarter, TML reported a substantial 100% yoy jump in Operating Profits to Rs1,050.3cr (Rs525.1cr).
- Net Profit spikes 110.1% on improved Operating performance: The company reported Net Profit of Rs729.1cr (Rs347cr) for the quarter, which was substantially above our expectation of Rs479.5cr, mainly due to a substantial improvement in OPM. However, higher Interest cost of Rs285.6cr (Rs148.3cr) and Depreciation of Rs263.4cr (Rs202.9cr) on the back of investments crowding specifically in the past few quarters restricted further pump up in Net Profits.
- Industry showing signs of recovery: TML reported 12.3% yoy growth in total Volumes, where total commercial vehicle (CV) Volumes recorded 13.9% yoy growth and passenger vehicle (PV) Volumes registered 9.5% yoy growth for the quarter. Exports continued in negative zone (38% de-growth for the quarter). However, with every passing month, the dip in volumes is reducing and giving signals of an impending recovery in volumes. The volume growth of the company in the domestic market was influenced by a 19.6% rise in the light commercial vehicle (LCV) Segment driven mainly by growth in ACE Truck and success of ACE Magic and Winger. Consequently, TML gained market share both in the medium and heavy commercial vehicle (MHCV, 63.5%) and LCV (66.8%) Segments.
Conference Call ? Key Highlights
- Management indicated that the positive measures taken by the government on lowering Excise Duty and Interest rates would benefit overall industry to come out from the slowdown witnessed in FY2009. The company is hopeful of a slow but steady recovery in volumes going forward aided by an improving economic scenario and stabilising freight rates.
- The domestic CV industry registered 10.4% growth in Volumes, while TML?s Volumes grew 16.3%. The domestic M&HCV Segment declined by 1%, while TML?s Volumes grew 5%. Further, while the domestic LCV Segment clocked a robust 27% growth, TML?s Volumes increased 33%. The M&HCV Truck Segment registered 1.4% growth after a long hiatus with declines of around 40%, 65% and 59% in 1QFY2010, 3QFY2009 and 4QFY2009, respectively. The M&HCV Bus Segment Volumes declined by 15.3%, while TML Volumes grew by 8.7% on the back of good orders from STUs, with guidance on further growth in the Bus Segment particularly with an order of 5,000 buses to be executed in FY2010 under the JNNURM scheme. The company passed on hardened commodity prices in form of price increase in the CV Segment to the extent of 8-9% in FY2009 and around 1.5% in 2QFY2010.
- The PV industry registered 23% growth driven primarily by product interventions by incumbents, finance availability and pre-festive season buying. The Indica Vista continued its strong performance in the Small Car Segment, however its market share declined to 10.3% (11.7%) in 2QFY2010. The company commenced Nano deliveries during the current quarter. To-date, it has delivered around 7,506 vehicles. During 1HFY2010, the company sold 8,165 Fiat vehicles registering substantial growth of 690% mainly driven by Grande Punto and Linea. Competitive intensity and anticipation of the new Indigo sedan led to a decline in market share of the entry-level midsize segment, from 21.9% to 15%. The quarter also saw launch of the new Indigo ?Manza? to revive growth in the entry-midsize segment. Jaguar and Land Rover vehicles continue to maintain strong order book. Utility vehicles (UVs) face considerable competition from the segment leaders, and renewed efforts are in place to grow in 2HFY2010E.
- The key export markets have been impacted by poor economic conditions and contraction in liquidity. The company?s Export Volumes fell 38% during 2QFY2010 due to market contraction in most prime export markets. However, the North and East regions have shown some signs of stability, while the West and the South continue to remain weak.
- The company?s Inventory days increased marginally to 33 days in 2QFY2010 from 32 days in 1QFY2010 mainly due to improving production levels.
- Net Debt at the end of 2QFY2010 stood at Rs18,600cr (Rs16,954cr in1QFY2010). Debtor days increased to 21 days (18 days) during quarter. The company successfully raised funds through GDR and FCCN Issues in October 2009 to repay its original bridge loan of US $3bn, which was availed to finance the acquisition of Jaguar Land Rover via various modes of fund raising including the Divestments in Tata Steel, Rights Issues, Issuance of Bonds. The company is committed to reducing its leverage through divestments, internal accruals and capital raising at the appropriate time.
- TML hopes to clock better FY2010E results on the back of softening Interest rates, reduced commodity costs and incentives announced by the government for the CV Sector in the last couple of months. The company has also embarked on an extensive cost-reduction program, targeting an overall cost reduction of Rs1,000cr over the next three years.
- TML?s Vehicle Finance Division accounts for a substantial part of its total vehicle business. The Division?s Book size in 2QFY2010 stood at Rs8,200cr, of which Rs1,500cr is in TML?s books and Rs6,700cr is in subsidiary, TMFL. Disbursals in 2QFY2010 were Rs1,550cr (Rs1,984cr), down 21.9%.
- Capex Plans: TML incurred capex of around Rs3,500cr in FY2009 and Rs1,300cr in 1HFY2010. TML plans to incur additional capex of Rs2,500-3,000cr every year hereon, with a focus on product development. It is concentrating on new launches and considers this as a way of de-leveraging its product portfolio. TML is building new capacities at different plants and simultaneously working on six new (CV and PV) platforms. TML is now actively reviewing its capex plans due to the weakening demand environment. It does not envisage changing its product development plans, but is likely to postpone some of its capacity expansion plans.
Outlook and Valuation
We believe that FY2010 will be a year of recovery for TML?s standalone business, due to overall glimmers of improvement in economic parameters. The cut in Interest rates and overall improvement in the financing scenario are expected to help TML report better Volume growth in 2HFY2010. Our estimates for TML factor in 18% CAGR in CV Volumes over FY2009-11E. Following recovery in its core business, TML?s key subsidiaries (linked to the fortunes of CV industry) are also expected to show a good turnaround going forward. Further, with the positive trend in the external environment in financial markets and improvement in general liquidity, TML?s has partially met its overall funding requirements (including JLR) at reasonable terms. Further, full recovery in the domestic CV cycle in FY2011, is expected to reduce pressure on cash flows and facilitate debt repayment. However, JLR's key European and US markets have deteriorated materially in recent months, and are expected to remain weak at least over the next 2-3 quarters, which could continue to drag TML's consolidated performance for some time.
We estimate TML to record a Net Loss in FY2010E, but expect a recovery in FY2011E on a consolidated basis. At the CMP of Rs539, on a consolidated basis, the stock is trading at 18.7x FY2011E Earnings and 3.7x FY2011E P/BV. We believe that the JLR weakness will continue and is already known. Hence, we value the stock on the sum-of-the-parts (SOTP) methodology, and recommend Accumulate, with a Target Price of Rs572. We have valued the Core business at Rs510, which is 8x FY2011E EV/EBITDA and 13x FY2011 P/E. Our embedded value of the subsidiaries and investments in TML's books (including JLR) works out to Rs62 per share.
Disclamer: jeg købte 1. portion af aktien i marts 2009, og øgede positionen efter regnskabet igår.
Vh Hya
28/10 2009 16:53 stengård 0
21049 spændende læsning... selvom det går godt på hjemmemarkedet - så er der udfordringer However, JLR's key European and US markets have deteriorated materially in recent months, and are expected to remain weak at least over the next 2-3 quarters, which could continue to drag TML's consolidated performance for some time.
jeg synes ikke det ligner den mest oplagt succeshistorie på den kortere bane - med et forventet underskud også i 2010, men du plejer jo at have en dygtig hånd med udvælgesen
jeg synes ikke det ligner den mest oplagt succeshistorie på den kortere bane - med et forventet underskud også i 2010, men du plejer jo at have en dygtig hånd med udvælgesen
8/11 2009 07:45 Porter 021541 Hej Hya
Kender ikke meget til Tata Motors Ltd. og har derfor siddet og studeret den her lidt på en søndag morgen. Kan se at den handles både på NYSE (yahoo symbol TTM) også Bombai Stock Exchange (yahoo symbol TATAMOTORS.NS). Er der nogle praktiske forskelle på at købe aktien de 2 steder?
Kan derudover se at de er klar med en ny fabrik til deres Nano bil fra marts 2010 med en årlig kapacitet på 250000 biler, ligesom de overvejer at lade andre producere bilen under egne mærker. Det burde give god omsætning fra marts og frem når salget kommer igang.
Reuters nyhederne for TATA motors i Bombai.:
http://www.reuters.com/finance/stocks/overview?symbol=TAMO.BO
Rent teknisk er aktien på vej op igen efter at have været nede og vende i området omkring 11.38-11.45 2 gange i oktober måned.
Kender ikke meget til Tata Motors Ltd. og har derfor siddet og studeret den her lidt på en søndag morgen. Kan se at den handles både på NYSE (yahoo symbol TTM) også Bombai Stock Exchange (yahoo symbol TATAMOTORS.NS). Er der nogle praktiske forskelle på at købe aktien de 2 steder?
Kan derudover se at de er klar med en ny fabrik til deres Nano bil fra marts 2010 med en årlig kapacitet på 250000 biler, ligesom de overvejer at lade andre producere bilen under egne mærker. Det burde give god omsætning fra marts og frem når salget kommer igang.
Reuters nyhederne for TATA motors i Bombai.:
http://www.reuters.com/finance/stocks/overview?symbol=TAMO.BO
Rent teknisk er aktien på vej op igen efter at have været nede og vende i området omkring 11.38-11.45 2 gange i oktober måned.
4/1 2010 05:35 Hya 024004 Tata Motors December sales register 105% increase
Submitted by Himanshu Thakur on Sun, 01/03/2010 - 19:50
In a clear indication of resilient Indian economy, auto sales in the country scaled new milestones with almost all leading auto makers reported unprecedented rise in their vehicle sales in December.
The country?s largest automaker, Tata Motors Ltd registered 105 per cent growth in sales during the month selling 51,627 units compared to 25,219 vehicles in December 2008.
Tata Motors sales in the commercial vehicles segment of the country stood at 33,519 vehicles compared to 14,056 vehicles in the corresponding period last year, thus, registering 138% growth rate.
Sales of passenger cars surged 49 per cent with the sale of 14,654 units during the reporting period as compared to 9,838 in December 2008.
The firm said in statement, ?The growth in December 2009 has come over low sales in December 2008, impacted by the downturn in the automobile industry during that period.?
All other manufacturers including Maruti, Hyundai and Hero Honda reported their best- ever sales in December in line with revival of growth in the auto-industry. Maruti and Hyundai posted a sales growth rate of 36.5% and 42.3% respectively
Submitted by Himanshu Thakur on Sun, 01/03/2010 - 19:50
In a clear indication of resilient Indian economy, auto sales in the country scaled new milestones with almost all leading auto makers reported unprecedented rise in their vehicle sales in December.
The country?s largest automaker, Tata Motors Ltd registered 105 per cent growth in sales during the month selling 51,627 units compared to 25,219 vehicles in December 2008.
Tata Motors sales in the commercial vehicles segment of the country stood at 33,519 vehicles compared to 14,056 vehicles in the corresponding period last year, thus, registering 138% growth rate.
Sales of passenger cars surged 49 per cent with the sale of 14,654 units during the reporting period as compared to 9,838 in December 2008.
The firm said in statement, ?The growth in December 2009 has come over low sales in December 2008, impacted by the downturn in the automobile industry during that period.?
All other manufacturers including Maruti, Hyundai and Hero Honda reported their best- ever sales in December in line with revival of growth in the auto-industry. Maruti and Hyundai posted a sales growth rate of 36.5% and 42.3% respectively
