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Up Tata Motors target, falling pound to boost JLR margin: CLSA

Benefits of significant pound depreciation will flow through into JLR's margin that may improve to 16 percent by FY19 from 10.3 percent in Q2FY17, CLSA feels.

January 17, 2017 / 09:58 AM IST
 
 
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Moneycontrol Bureau

Tata Motors shares gained more than one percent intraday Monday after CLSA raised target price on the stock to Rs 650 (from Rs 585 earlier) on likely significant improvement in both JLR and India businesses.

Jaguar Land Rover (JLR) new Discovery in second half of current financial year and mid sized Range Rover in FY18 are key products in pipeline, the brokerage house says.

Even benefits of significant pound depreciation will flow through into JLR's margin that may improve to 16 percent by FY19 from 10.3 percent in Q2FY17, CLSA feels.

Sterling pound has depreciated 17 percent since January 2016 and touched a fresh 31-year low against the dollar on Brexit.

The brokerage house says it expects earnings per share EPS boost by 53 percent CAGR and feels valuations at 8x FY19 price-to-earnings are attractive.

JLR's global retail sales volumes (including China joint venture) increased 8 percent year-on-year to 1.49 lakh units in the quarter ended December 2016, driven by Jaguar F-PACE (launched in second quarter of 2016), XF and Discovery Sport. China growth was 38 percent, Europe 7 percent, North America 20 percent while UK showed 3 percent degrowth and overseas 21 percent on yearly basis.

At 11:05 hours IST, the stock was quoting at Rs 521.40, up Rs 6.75, or 1.31 percent on the BSE.Posted by Sunil Shankar Matkar

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