Tata Motors' JLR Q2 Wholesales At 96,800 Units: Motilal Oswal

Motilal Oswal Report

Tata Motors Ltd.’s all three businesses are in a recovery mode. The India commercial vehicle business is expected to see a cyclical recovery, while the India passenger vehicle business is in a structural recovery mode. Jaguar Land Rover is also seeing a cyclical recovery, supported by a favorable product mix. However, supply-side issues may delay the recovery process. While there will be no near-term catalysts from the JLR business, the India business (~50% of SoTP) will continue to see a recovery.

The stock trades at 15 times/14.4 times FY24E/FY25E consolidated earnings per share, and 4.6 times/4.1 times FY24E/FY25E consolidated enterprise value/Ebitda.

We maintain our 'Buy' rating on the stock with a target price of Rs 740 (based on September-25 SOTP).

Wholesale volumes grew 29% YoY and 4% QoQ

JLR’s wholesale volumes (excluding China joint venture) grew 29% YoY/4% QoQ to 96,800 units (est. 92,500 units). H1 FY24 wholesales grew 29% YoY to 190,100 units.

A breakup between Jaguar and Land Rover wholesale was not shared in the press release. Higher-than-expected wholesales despite an annual two-week summer shutdown indicate that supply-side constraints continue to ease.

Retail volumes (including China JV) up 21% YoY/35% QoQ

Q2 retails grew 21% YoY (+35% QoQ) to 106,600 units, while H1 FY24 retails increased by 25% to 208,500 units. Retails were higher in all the markets, with strong growth witnessed in the rest of world (+56% YoY), North America (+32% YoY), China (+7% YoY), UK (+9% YoY) and Europe (+16% YoY).

The order book declined by 17,000 units QoQ to 168,000 units in Q2 FY24 (versus Q1 order book of 185,000 units) due to increased order fulfilment. RR/RR Sport/ Defender account for 77% of the order book.

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