Tata Motors Share price: CLSA maintains buy rating with Rs 270 target as JLR numbers improve

Tata Motors Share price:  JLR 3QFY21 retail volume improved 13% QoQ & share of EVs rose to 12% Jaguar Land Rover’s (JLR) Q3 FY21 retail sales came in at 128K units (-9% YoY), broadly in line with CLSA’s monthly tracker. The Jaguar brand declined 21% YoY in Q3 while Land Rover performed better (-5% YoY). China volume grew 19% YoY resulting in 25% volume share (vs 19% in Q3 FY20). The volume share of electric vehicles (EV) (BEV and PHEV) increased to 12% in Q3, from 6% in Q2. 

Rahul Kamdar | Jan 12, 2021, 02:26 PM IST

Tata Motors Share price:  JLR 3QFY21 retail volume improved 13% QoQ & share of EVs rose to 12% Jaguar Land Rover’s (JLR) Q3 FY21 retail sales came in at 128K units (-9% YoY), broadly in line with CLSA’s monthly tracker. The Jaguar brand declined 21% YoY in Q3 while Land Rover performed better (-5% YoY). China volume grew 19% YoY resulting in 25% volume share (vs 19% in Q3 FY20). The volume share of electric vehicles (EV) (BEV and PHEV) increased to 12% in Q3, from 6% in Q2. 

 

1/5

Jaguar Land Rover continues to outperform in China

Jaguar Land Rover continues to outperform in China

Jaguar Land Rover continues to outperform in China:

China retail sales grew 19% YoY driven equally by imports and the local JV. The share of China in overall retail remained high at 25% in Q3 vs 27% in the first half of FY21 and 18% in FY20. UK volume declined 9% YoY and deteriorated sequentially due to a combined the strict lockdown and seasonality. 

 

2/5

Land Rover outperforms driven by the Defender, RR and RR Sport

Land Rover outperforms driven by the Defender, RR and RR Sport

Land Rover outperforms driven by the Defender, RR and RR Sport:

The volume share of Land Rover increased to 78% in Q3 FY21 vs 76% in 2QFY21 and 75% in Q3 FY20. This was driven by the introduction of the new Defender and a sequential recovery in the RR and RR Sport. Within Jaguar, only the I-Pace (BEV) has been able to increase share. 

 

3/5

JLR push to increase EV share

JLR push to increase EV share

JLR push to increase EV share: 

This should have been partly driven by a push to increase EV share in December to meet the EU emission norms (similar trend witnessed at other OEMs). In Q3 FY21, the share of BEVs was at 6.1% (vs 3% in Q2) and PHEVs was at 5.5% (vs 3% in Q2). CLSA expects JLR’s share of xEV to rise further as its PHEV variants ramp-up over the next few quarters.

 

4/5

Jaguar Land Rover in other markets

Jaguar Land Rover in other markets

Jaguar Land Rover in other markets:

All other markets remained negative YoY but saw a sequential improvement in volume. JLR has yet to report its Q3 FY21 wholesales. CLSA estimates it to be 103K units (-29% YoY) which would be 13% QoQ growth over Q2 wholesales of 91K units (-32% YoY).

5/5

CLSA on Tata Motors-JLR

CLSA on Tata Motors-JLR

CLSA on Tata Motors-JLR

CLSA continues to forecast a sequential volume recovery for JLR coupled with mix improvement and cost rationalisation, which should drive strong FCF generation and deleveraging for Tata Motors. CLSA maintains BUY recommendation on an unchanged target price of Rs270, and it remains their top pick.