Kim Eng maintains 'buy' rating for Tata Motors

MUMBAI: JLR once again to rescue Tata Motors as JLR sales have been robust and resilient thru the European crisis and increasing demand from China.

A continuation of strong demand for Evoque in China led the 42 per cent increase in volume for Land Rover and offset weak demand in Spain and Italy.

However Tata Motors has disappointed in domestic business. Its India revenue were down 11 per cent YoY to Rs 105 bn due to low demand for trucks, cars. Tata Motors Q1 recurring EPS growth of 30 per cent to Rs 8.4 is better than expected. "We attribute the entire earnings growth to a 34 per cent increase in sales of premium car/SUVs of Jaguar Land Rover (JLR) to 83k units for Q1FY13" said Jigar Shah of Kim Eng in a recent report.

Kim Eng forecast modest EPS growth of 11 per cent for FY13F to Rs 43.4 and maintain 'buy' on Tata Motors and set target price of Rs 335, due to cheap PER of 5x.

"We maintain our FY13F volume of 340k (+8 per cent) units for JLR due to 1) strong demand for its products in M4, 2) start of a third shift at its UK plant from this month enabling increase in production and 3) launch of new Range Rover and Sportbrake by end-2012" said Kim Eng report.