India`s largest automobile company, Tata Motors posted consolidated net profit of Rs 19.89 billion for the June 2010 quarter, a significant turnaround from a loss of Rs 3.28 billion in the corresponding quarter last year. Consolidated revenues grew 64.20% at Rs 270.56 billion for quarter ended June 2010 as against Rs 164.73 billion in the corresponding quarter previous year.
Post the positive results, shares of company traded higher by Rs 940.10, up Rs 21.15, or 2.30% at the Bombay Stock Exchange (BSE) on Tuesday at 2:51 p.m.
Currently, shares of the company gained Rs 53.2, or 5.56%, to trade at Rs 1,010.50. The total volume of shares traded was 2,817,724 at the BSE (12.45 p.m., Wednesday).
In an exclusive discussion with Myiris.com, analysts discuss what they make out from the numbers and how have they positioned themselves in the stock:
Prabhudas Lilladhar:
Q1FY11 standalone results were disappointing: Tata Motors (Q,N,C,F)* posted a 62.60% y-o-y growth in its revenues at Rs 104 billion. Overall volumes grew by 47.6% y-o-y, whereas average realization/vehicle improved by 10% y-o-y on account of better product mix. EBITDA grew by 61.20% y-o-y at Rs 11.70 billion with EBITDA margins flat y-o-y at 11.3%. Sequentially, the raw material cost was flat at 70.5% of revenue on account of price hikes taken by the company to compensate for the higher raw material cost. On account of tight control over other expenses, the EBITDA margins expanded 120bps Q-o-Q. As a result the Adj. net profit grew by 25% Q-o-Q at Rs 4.60 billion.
Valuations: With signs of recovery in some of the key markets and aggressive cost-cutting measures, we have built-in a 21.7% volume growth at 0.24 million units in FY11E and an EBITDA margin of 14.5% at JLR. We value JLR at 3.5x FY12E EV/EBITDA multiple at Rs 510 a share. Our SOTP valuation stands at Rs 1,136 a share. We believe that an improvement in the core Commercial Vehicle (CV) business, coupled with recovery at the JLR front would lead to better stock price performance. Maintain `Accumulate`.
Emkay Global Financial Services:
Consolidated Sales: JLR was a show stealer. Revenues were above expectation as both Tata Motors (expectation of Rs 112 billion) and JLR (expectation of Rs 145 billion) surprised positively due to better product mix resulting in higher realisations.
Valuations: We have upgraded our FY11E and FY12E earnings by 63% and 65% to Rs 100.50 and Rs 122.50 respectively. The revision in estimates is due to volume upgrades in JLR along with upgrades in realizations and hence net profits. We have upgrades our rating on the stock from Hold to Accumulate and Target Price to Rs 1,140 (earlier Rs 810).
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