INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: For the greater part of the past two years, Tata Motors traded at a 40 per cent premium to BMW and Daimler, with
Jaguar Land Rover (JLR) often doing well in several luxury markets
That premium has now disappeared, with greater global emphasis on the electric powertrain and cleaner internal combustion engines biting
even the most refined of carmakers.
Although Tata Motors sells cars and trucks locally, the UK subsidiary JLR accounts for nearly 80-85 per
In the March quarter, retail volume dropped 6.8 per cent to 1.72 lakh units and wholesale volume rose 2 per cent to 1.62 lakh units
For the full year, wholesale volume grew 2 per cent to 5.45 lakh units, with incremental sales from five models supporting overall
Europe accounted for twothirds of total volumes in the March quarter: Unit sales fell 21 per cent in the UK and 11.7 per cent in Europe, and
rose 3.5 per cent in the US.
Given the muted underlying demand in developed markets, volume growth is likely to soften for the current
The Street has priced 4 per cent and 7 per cent volume growths in the current and next fiscal years, respectively.
On the margin front, the
situation does not seem very encouraging
Margins are under pressure due to continued incentives in several markets and higher amortisation
The company has guided for the EBIT margin in the range of 4-7 per cent between FY19 and FY21.
For the long term, the company lowered its
EBIT margin guidance to 7-9 per cent from 8-10 per cent earlier
Although JLR took an early lead with the development of I-Pace, it needs to continue to invest in new models and technology to match rising
contributed positively to the consolidated operating margins because of higher profitability and cost efficiencies
Analysts peg the value of domestic operations at Rs 70-80 per share by ascribing EV/ EBITDA multiple of seven times, a valuation level that
appears sharply discounted when compared with Ashok Leyland.
