tata motors result updated

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Please refer to important disclosures at the end of this report 1

Y/E March – Consolidated (` cr) 3QFY12 3QFY11 % chg (yoy) Angel est. % diff

Net sales 45,260 31,442 44.0 42,421 6.7

OPM (%) 15.1 14.3 81bp 11.8 329bp

Reported PAT 3,406 2,424 40.5 2,560 33.0

Source: Company, Angel Research

Stellar show at JLR drives overall performance: Tata Motors (TTMT) reported an

extremely strong set of results, driven by stellar performance at JLR. The company’s

top line grew by robust 44% yoy (25% qoq), led by 41.5% yoy (28.6% qoq) growth in

JLR sales, which were driven by a 36.7% yoy (26.9% qoq) jump in volumes and 3.1%

yoy (0.8% qoq) improvement in net average realization. The company’s operating

margin surprised positively and stood at 15.1% on account of better-than-expectedperformance at JLR (EBITDA margin at 18.2%), which benefitted from superior

product and geography mix, favorable forex and higher operating leverage. As a

result, net profit increased by strong 40.5% yoy (81.4% qoq) to ` 3,406cr.

Y/E March – Standalone (` cr) 3QFY12 3QFY11 % chg (yoy) Angel est. % diff

Net sales 13,338 11,520 15.8 14,242 (6.3)

OPM (%) 6.4 10.1 (376)bp 6.2 16bp

Reported PAT 174 410 (57.6) 282 (38.4)


Standalone performance under pressure: TTMT posted disappointing standalone

results on account of unfavorable product mix, higher marketing spends in the

passenger vehicle (PV) business and raw-material cost pressures. The top line reported

healthy 15.8% yoy (3% qoq) growth, driven by 21.5% yoy (10% qoq) growth in

volumes. Net average realization, however, declined by 4.8% yoy (6.4% qoq) due to

higher proportion of PVs in the total volume mix. Operating margin continued to be

under stress and declined by 376bp yoy to 6.4%, led by higher marketing spends and

commodity cost pressures. Hence, net profit declined by 57.6% yoy to ` 174cr.

Outlook and valuation: We have revised our consolidated earnings estimates

upwards by 19.5%/32.4% for FY2012/13 on account of better-than-expected JLR

performance during the quarter. We broadly retain our standalone earnings estimates

and increase our JLR estimates over FY2012/13, driven by the increase in our volume

and EBITDA margin estimates. We have increased JLR volume estimates by ~12% for

FY2013 and margin estimates for JLR by ~100bp in FY2013. At ` 286, the stock is

trading at 7.4x FY2013E earnings. We maintain Accumulate on the stock with anSOTP target price of `308.

Key financials (consolidated)Y/E March (` cr) FY2010 FY2011 FY2012E FY2013E

Net Sales 92,519 123,133 161,482 186,930

% chg 30.5 33.1 31.1 15.8

Net Profit 1,526 9,065 10,801 12,226

% chg - 494.0 19.2 13.2

EBITDA (%) 8.4 13.7 13.2 12.6

EPS (`) 5.3 28.6 34.0 38.5

P/E (x) 53.5 10.0 8.4 7.4

P/BV (x) 10.0 4.8 3.5 2.6

RoE (%) 21.3 65.8 47.5 40.0

RoCE (%) 8.9 24.7 27.9 27.9

EV/Sales (x) 1.2 0.9 0.7 0.6

EV/EBITDA (x) 14.8 6.6 5.2 4.7


ACCUMULATECMP ` 286

Target Price ` 308

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 35.0

MF / Banks / Indian Fls 14.9

FII / NRIs / OCBs 42.1

Indian Public / Others 8.0

Abs. (%) 3m 1yr 3yr

Sensex 7.8 (0.4) 88.9

Tata Motors 58.0 15.7 938.8

18,202

5,532

TAMO.BO

90,890

1.6

292/138

1,311,048

10

Market Cap ( ` cr)

Beta

52 Week High / Low

TTMT@IN

Face Value ( ` )

BSE Sensex

Nifty

Reuters Code

Automobile

Avg. Daily Volume

Yaresh Kothari

022-3935 7800 Ext: [email protected]

Tata Motors

Performance Highlights

3QFY2012 Result Update | Automobile

February 15, 2012



Tata Motors | 3QFY2012 Result Update

2February 15, 2012

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) 3QFY12 3QFY11 yoy chg (%) 2QFY12 qoq chg (%) 9MFY12 9MFY11 yoy chg (%)

Net Sales 13,338 11,520 15.8 12,954 3.0 38,190 33,185 15.1

Consumption of RM 8,322 6,644 25.3 8,075 3.1 23,239 18,427 26.1(% of Sales) 62.4 57.7 62.3 60.9 55.5

Staff Costs 695 581 19.6 683 1.8 1,999 1,672 19.6

(% of Sales) 5.2 5.0 5.3 5.2 5.0

Purchases of TG 1,538 1,423 8.1 1,501 2.5 4,428 5,151 (14.0)

(% of Sales) 11.5 12.4 11.6 11.6 15.5

Other Expenses 1,931 1,703 13.4 1,822 6.0 5,832 4,516 29.1

(% of Sales) 14.5 14.8 14.1 15.3 13.6

Total Expenditure 12,486 10,351 20.6 12,081 3.4 35,498 29,766 19.3

EBITDA 852 1,168 (27.1) 873 (2.4) 2,691 3,419 (21.3)

EBITDA margin (%) 6.4 10.1 6.7 7.0 10.3

Interest 186 275 (32.3) 212 (12.3) 651 896 (27.3)

Depreciation 421 337 25.0 387 8.9 1,173 976 20.2

Other Income 25 5 362.3 57 (56.0) 197 152 29.6

PBT (excl. Extr. Items) 269 562 (52.0) 331 (18.5) 1,064 1,699 (37.4)

Exceptional Items 83 31 - 294 (72) 375 93 -

PBT (incl. Extr. Items) 186 531 (64.9) 37 410.2 689 1,606 (57.1)

(% of Sales) 1.4 4.6 0.3 1.8 4.8

Provision for Taxation 13 121 (89.6) (66) (119.1) 12 368 (96.7)

(% of PBT) 6.7 22.8 (179.5) (103.8) 1.7 22.9

Reported PAT 174 410 (57.6) 102 70.2 677 1,238 (45.3)

PATM 1.3 3.6 0.8 1.8 3.7

Equity capital (cr) 634.8 633.1 634.8 634.8 633.1

EPS (`) 2.7 6.5 (57.8) 1.6 70.2 10.7 19.6 (45.5)


Exhibit 2: Quarterly volume performance (Standalone)

Y/E March (units) 3QFY12 3QFY11 yoy chg (%) 2QFY12 qoq chg (%) 9MFY12 9MFY11 yoy chg (%)

M&HCV 53,982 50,883 6.1 54,334 (0.6) 157,431 149,616 5.2

LCV 89,636 74,677 20.0 89,960 (0.4) 256,629 201,844 27.1

Total Commercial Vehicles 143,618 125,560 14.4 144,294 (0.5) 414,060 351,460 17.8

Utility Vehicles 13,745 9,472 45.1 12,003 14.5 36,375 29,013 25.4

Cars 69,748 51,841 34.5 50,137 39.1 176,148 186,514 (5.6)

Total Passenger Vehicles 83,493 61,313 36.2 62,140 34.4 212,523 215,527 (1.4)

Exports (Inc Above ) 14,135 15,962 (11.4) 16,004 (11.7) 45,025 42,658 5.5

Total Sales 227,111 186,873 21.5 206,434 10.0 626,583 566,987 10.5


Standalone performance under pressure: On a standalone basis, the company’s

top line grew by healthy 15.8% yoy (3% qoq) to ` 13,338cr, driven by 21.5% yoy

(10% qoq) growth in volumes. Volume growth was led by strong 36.2% yoy (34.4%

qoq) growth in PV sales. Net average realization, however, declined by 4.8% yoy (6.4% qoq) due to higher proportion of PVs in the total volume mix.




3February 15, 2012

Operating margin declined substantially by 376bp yoy (35bp qoq) to 6.4% due to

raw-material cost pressures, higher marketing spends in the passenger car

business and higher discounts. As a result, operating profit declined by 27.1% yoy

(2.4% qoq) to `

852cr. Reported net profit declined by 57.6% yoy to `

174cr, led by weak operating performance. TTMT reported forex loss of ` 83.3cr, which included

credit of ` 208.1cr as per change in accounting standards. Lower tax rate of 6.7%

also boosted standalone profits.

Exhibit 3: Strong volume growth led by PV sales


Exhibit 4: Net average down 4.8% yoy


Exhibit 5: EBITDA margin dips on input cost pressures


Exhibit 6: Net profit down 57.6% yoy


63.055.6

47.6

31.9

17.412.7

6.2 4.0

21.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

0

50,000

100,000

150,000

200,000

250,000

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

(%)(units) Total volume yoy growth (RHS)

16.2

13.4

10.4 9.5 9.3

6.1 7.6 8.2

(4.8)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

520,000

530,000

540,000

550,000

560,000570,000

580,000

590,000

600,000

610,000

620,000

630,000

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

(%)( ` ) Net average realisation/unit yoy growth (RHS)

12.69.3 11.1 9.7 10.1 8.4 8.1 6.7 6.4

68.9 70.9 71.0 72.9 70.4 70.9 69.6 74.3 74.3

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

(%) EBITDA margin Raw material cost/sales

4.5

4.9

3.8 3.8 3.6 3.9

3.4

0.8

1.3

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0

100

200

300

400

500

600

700

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

(%)( ` cr) Net profit (LHS) Net profit margin (RHS)




4February 15, 2012

Exhibit 7: Quarterly performance (Consolidated)

Y/E March (` cr) 3QFY12 3QFY11 yoy chg (%) 2QFY12 qoq chg (%) 9MFY12 9MFY11 yoy chg (%)

Net Sales 45,260 31,442 44.0 36,198 25.0 114,747 86,841 32.1

Consumption of RM 27,096 17,823 52.0 21,335 27.0 67,772 48,400 40.0(% of Sales) 59.9 56.7 58.9 59.1 42.2

Staff Costs 3,207 2,427 32.2 2,866 11.9 8,665 6,850 26.5

(% of Sales) 7.1 7.7 7.9 7.6 6.0

Purchase of Goods 2,899 2,419 19.8 2,804 3.4 8,296 7,339 13.0

(% of Sales) 6.4 7.7 7.7 7.2 6.4

Other Expenses 5,232 4,284 22.1 4,689 11.6 14,446 11,906 21.3

(% of Sales) 11.6 13.6 13.0 12.6 10.4

Total Expenditure 38,433 26,953 42.6 31,694 21.3 99,180 74,495 33.1

EBITDA 6,827 4,489 52.1 4,504 51.6 15,567 12,346 26.1

EBITDA margin (%) 15.1 14.3 12.4 13.6 14.2

Interest 577 499 15.5 525 9.9 1,868 1,592 17.3

Depreciation 1,616 1,239 30.4 1,331 21.4 4,090 3,345 22.3

Other Income 24 10 142.7 61 (60.5) 161 64 151.5

PBT (excl. Extr. Items) 4,658 2,760 68.7 2,709 72.0 9,770 7,472 30.7

Exceptional Items 164 33 439 660 (54)

PBT (incl. Extr. Items) 4,494 2,728 64.7 2,270 98.0 9,110 7,526 21.0

(% of Sales) 9.9 8.7 6.3 7.9 8.7

Provision for Taxation 1,071 319 235.9 363 195.0 1,786 928 92.5

(% of PBT) 23.8 11.7 16.0 49.0 19.6 12.3

PAT 3,423 2,409 42.1 1,907 79.5 7,324 6,598 11.0

PATM 7.6 7.7 5.3 6.4 7.6

Minority Interest 21 11 93.7 34 (37.5) 58 28 105.9

Associate Companies Profit 4 26(85.5) 4 (3.5) 17 67 (73.9)

PAT after MI 3,406 2,424 40.5 1,877 81.4 7,283 6,636 9.7

Equity shares (cr) 634.8 633.1 634.8 634.8 633.1

Reported EPS (`) 10.7 7.7 40.1 5.9 81.4 22.9 21.0 9.5


Consolidated performance

Stellar show at JLR drives overall performance: Consolidated top line registered

impressive 44% yoy (25% qoq) growth to ` 45,260cr, aided by 41.5% yoy (28.6%

qoq) growth in JLR revenue. JLR revenue was driven by a 36.7% yoy (26.9% qoq)

jump in volumes to 86,322units and 3.1% yoy (0.8% qoq) improvement in net

average realization. New launches like Jaguar XF 2.2 and Evoque led to strong

volume performance at JLR during the quarter. Volume growth continued to be

driven by growth in emerging markets, with China and Russia reporting 81% and

34% yoy growth, respectively.




5February 15, 2012

Exhibit 8: Net sales up 44% yoy, aided by 41.5% jump in JLR revenue


On the operating front, margin surprised positively and stood at 15.1%, registering

an 81bp yoy and 264bp qoq expansion. Margin expansion was led by JLR, while

standalone operations continued to be under pressure. JLR’s EBITDA margin

expanded strongly by 260bp qoq to 18.2%, benefitting from improving product

and geography mix and favorable currency movement. Reported net profit,

therefore, posted strong 40.5% yoy (81.4% qoq) growth to ` 3,406cr. During

3QFY2012, there was forex credit of ` 660.6cr on account of change in accounting

standards (AS-11).

Exhibit 9: EBITDA margin surprises positively


Exhibit 10: Strong net profit growth of 40.5% yoy


47.1

84.7

65.0

36.5

20.7 23.7 24.1 25.8

44.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

(%)( ` cr) Net sales (LHS) Net sales growth (RHS)

11.4 10.914.2 13.9 14.3 12.5 12.6 12.4 15.1

67.1 65.2 63.4 64.6 64.7 65.2 65.7 67.2 66.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

3 Q

F Y 1 0

4 Q

F Y 1 0

1 Q

F Y 1 1

2 Q

F Y 1 1

3 Q

F Y 1 1

4 Q

F Y 1 1

1 Q

F Y 1 2

2 Q

F Y 1 2

3 Q

F Y 1 2

(%) EBITDA margin Raw material cost/sales

2.5

7.87.4

7.7 7.77.4

6.05.2

7.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

3 Q

F Y 1 0

4 Q

F Y 1 0

1 Q

F Y 1 1

2 Q

F Y 1 1

3 Q

F Y 1 1

4 Q

F Y 1 1

1 Q

F Y 1 2

2 Q

F Y 1 2

3 Q

F Y 1 2

(%)( ` cr) Net profit (LHS) Net prof it margin (RHS)




6February 15, 2012

Exhibit 11: Quarterly performance - JLR

Y/E March (GBP mn) 3QFY12 3QFY11 yoy chg (%) 2QFY12 qoq chg (%) 9MFY12 9MFY11 yoy chg (%)

Revenue 3,749 2,650 41.5 2,915 28.6 9,367 7,135 31.3

Raw-material cost 2,386 1,660 43.7 1,902 25.4 6,062 4,446 36.3Employee expenses 254 196 29.6 235 8.1 699 575 21.6

Other expenditure 427 298 43.3 324 31.8 1,081 909 18.9

Total expenditure 3,067 2,154 42.4 2,461 24.6 7,842 5,930 32.2

% of sales 81.8 81.3 0.5 84.4 (2.6) 83.7 83.1 0.7

EBITDA 682 496 37.5 454 50.2 1,525 1,205 26.6

% of sales 18.2 18.7 (0.5) 15.6 2.6 16.3 16.9 (0.6)

Other income - - - -

Product development expense 43 43 - 34 26.5 103 76 35.5

Depreciation 136 114 19.3 113 20.4 342 299 14.4

EBIT 503 339 48.4 307 63.8 1,080 830 30.1

Interest 8 19 (57.9) 31 (74.2) 60 22 172.7

PBT (pre-exceptional) 495 320 54.7 276 79.3 1,019 808 26.1

Exceptional item 14 (24.0) (158.3) (60.0) (123.3) (43.0) 8.0 (637.5)

PBT 509 296 72 216 135.6 976 816 19.6

% of sales 13.6 11.2 2.4 7.4 6.2 10.4 11.4 (1.0)

Taxes 116 7 1,557.1 44 163.6 191 42 354.8

% of PBT 22.8 2.4 20.4 20.4 2.4 19.6 5.1 14.4

PAT 393 289 36 172 128.5 785 774 1.4


Stellar JLR performance: JLR reported net sales of GBP 3,749mn, up by 41.5% yoy

(28.6% qoq), boosted by strong volume growth of 36.7% yoy and 3% yoy

improvement in net average realization. Gross margin increased by 160bp

sequentially, driven by increased net average realization, superior product mix and

lower raw-material costs.

While according to IFRS, EBITDA margin stood at 18.2%, up 260bp qoq, under

Indian GAAP EBITDA margin came in at 20.1%. This difference is due to GBP60mn

of benefit in Indian GAAP on account of forex losses on debt, which are expensed

under IFRS, while under Indian GAAP they are passed through the balance sheet.

Reported PAT grew by 36% yoy (128.5% qoq) to GBP393mn on better operating

performance and lower interest outgo.

Management expects JLR to sustain its volume traction, led by recent launches like

Evoque and Jaguar XF 2.2 and expanding dealer network and increasing

marketing efforts. During the quarter, Freelander volumes were impacted by shift

in production towards Evoque.




7February 15, 2012

Exhibit 12: JLR’s quarterly performance


Exhibit 13: JLR’s performance – Region wise


Exhibit 14: Performance of subsidiaries

Key Subsidiaries (` cr) 3QFY2012 3QFY2011

Net sales EBITDA EBITDAM (%) Net profit Net sales EBITDA EBITDAM (%) Net profit

Tata Motor Finance 524 95 18.2 71 332 36 10.9 33

Tata Technologies 439 79 17.9 58 313 39 12.5 28

Tata Daewoo 705 32 4.5 (1) 659 25 3.8 (3)

TML Drivelines 174 106 60.9 61 146 81 55.7 42

Subsidiary Total 1,842 312 16.9 189 1,450 181 12.5 99


Outlook and valuation

We have revised our consolidated earnings estimates upwards by 19.5%/32.4%

for FY2012/13 on account better-than-expected JLR performance during the

quarter. We broadly retain our standalone earnings estimates and increase our JLR

estimates over FY2012/13, driven by the increase in our volume and EBITDA

margin estimates. We have increased JLR volume estimates by ~12% for FY2013

and margin estimates for JLR by ~100bp in FY2013.

Exhibit 15: Change in estimates (consolidated)

Y/E March Earlier estimates Revised estimates % chg

FY2012E FY2013E FY2012E FY2013E FY2012E FY2013E

Net sales (` cr) 144,712 162,452 161,482 186,930 11.6 15.1

OPM (%) 12.0 11.6 13.2 12.6 114bp 104bp

EPS (`) 28.5 29.1 34.0 38.5 19.5 32.4


At ` 286, the stock is trading at 7.4x and 4.7x FY2013E earnings and EV/EBITDA,

respectively. We maintain Accumulate on the stock with an SOTP target price of

`308. We have valued the domestic core business at ` 67/share, implying 10x

FY2013E earnings. Our embedded value of the subsidiaries and investments in

TTMT's books (including JLR) works out to ` 241/share. We have valued JLR at 7xFY2013E earnings, implying a ~30% discount to the average multiple of its peers.

13.4 10.913.9 14.1 11.9 11.9 12.6 13.2 13.0

41.946.1 45.2

42.346.4

55.1

50.752.4

65.3

0

10

20

30

40

50

60

70

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

('000 units) Jaguar Land Rover

0

5

10

15

20

25

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

4 Q F Y 1 1

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

('000 units) North America UK Europe Russia China Others




8February 15, 2012

Exhibit 16: SOTP valuation

Particulars Parameter Value/Share (`)Standalone FY2013E (10x P/E) 67

JLR FY2013E (7x PAT) 223Key subsidiaries and others 18

Target price 308


Exhibit 17: JLR peer valuation

P/E (x) P/B (x) EV/EBITDA (x) P/Sales (x)

CY12E CY13E CY12E CY13E CY12E CY13E CY12E CY13E

Audi 11.1 9.5 2.1 1.9 2.7 2.4 0.7 0.6

BMW 9.6 9.1 1.5 1.3 7.6 7.5 0.6 0.6

Daimler 9.0 7.9 1.2 1.1 8.6 7.7 0.5 0.4

Volkswagen 6.9 6.1 0.9 0.8 6.1 5.5 0.4 0.3

Source: Bloomberg, Angel Research

Key downside risk to our estimates: Lower-than-expected growth in JLR due to

uncertainty in key markets (Europe, U.K. and U.S.) will negatively affect our volume

growth estimates. Further, softening of domestic interest rates poses an upside risk

to our domestic volume estimates.

Exhibit 18: Angel vs. consensus forecast

Angel estimates Consensus Variation (%)

FY12E FY13E FY12E FY13E FY12E FY13E

Net sales (` cr) 161,482 186,930 153,822 174,617 5.0 7.1

EPS ( ` ) 34.0 38.5 32.4 35.3 5.2 9.1


Exhibit 19: Key assumptions

Y/E March (units) FY08 FY09 FY10 FY11 FY12E FY13E

M&HCV 179,415 122,077 167,829 209,522 219,998 237,598

LCV 173,434 167,834 233,697 287,463 353,579 406,616

Total CV 352,849 289,911 401,526 496,985 573,578 644,214

UV 50,299 39,917 34,124 43,063 52,537 57,791

Cars 179,268 166,920 176,683 192,842 187,057 205,762

Nano - - 30,353 70,432 70,000 77,000

Total PV 229,567 206,837 241,160 306,337 309,594 340,553

Exports (Inc Above ) 54,272 31,611 34,141 58,044 63,268 69,595

Total volume 582,416 496,748 642,686 803,322 883,171 984,767

JLR volume - - - 243,621 306,557 331,082





9February 15, 2012

Exhibit 20: One-year forward EV/EBITDA


Exhibit 21: Tata Motors vs. Sensex


Exhibit 22: Automobile – Recommendation summary

Company Reco.CMP

(`)Tgt. price

(`)Upside

(%)

P/E (x) EV/EBITDA (x) RoE (%) FY11-13E EPS

FY12E FY13E FY12E FY13E FY12E FY13E CAGR (%)

Ashok Leyland Accumulate 29 32 9.4 13.3 10.7 7.0 5.8 14.2 15.9 7.3

Bajaj Auto Neutral 1,746 - - 15.9 14.9 10.8 9.4 55.0 44.7 11.0

Hero MotoCorp Neutral 2,093 - - 17.8 15.5 10.4 8.7 66.2 55.0 21.0

Maruti Suzuki Neutral 1,304 - - 27.2 16.4 18.1 10.0 9.6 14.4 1.1

MM Accumulate 735 795 8.1 16.4 14.5 9.7 8.1 22.8 20.9 8.4

Tata Motors Accumulate 286 308 7.6 8.4 7.4 5.2 4.7 47.5 40.0 16.1

TVS Motor Buy 54 66 23.2 10.0 8.9 5.1 4.2 23.2 22.0 17.6


0

50,000

100,000

150,000

200,000

250,000

A p r -

0 3

D e c - 0

3

S e p - 0

4

J u n - 0

5

M a r -

0 6

D e c - 0

6

S e p - 0

7

J u n - 0

8

F e

b - 0

9

N o v - 0

9

A u g - 1

0

M a y - 1

1

F e

b - 1

2

( ` cr) EV (` cr) 2x 4x 6x 8x

0

50

100

150

200

250

A p r -

0 7

J u

l - 0 7

O c t - 0 7

F e

b - 0

8

M a y - 0

8

S e p - 0

8

D e c - 0

8

M a r -

0 9

J u

l - 0 9

O c t - 0 9

F e

b - 1

0

M a y - 1

0

S e p - 1

0

D e c - 1

0

M a r -

1 1

J u

l - 1 1

O c t - 1 1

F e

b - 1

2

Tata Motors Sensex




10February 15, 2012

Profit & loss statement (consolidated)

Y/E March (` cr) FY08 FY09 FY10 FY11 FY12E FY13E

Gross sales 40,089 74,093 95,567 127,420 167,165 193,510

Less: Excise duty 4,668 3,212 3,048 4,286 5,684 6,579Net Sales 35,422 70,881 92,519 123,133 161,482 186,930

Total operating income 35,422 70,881 92,519 123,133 161,482 186,930

% chg 10.5 100.1 30.5 33.1 31.1 15.8

Total Expenditure 31,490 69,371 84,747 106,316 140,247 163,302

Net Raw Materials 24,376 48,025 61,495 79,008 104,156 121,505

Other Mfg costs 1,515 2,325 2,954 3,512 5,167 5,982

Personnel 2,745 7,297 8,943 9,343 12,434 14,581

Other 2,854 11,724 11,355 14,453 18,490 21,235

EBITDA 3,932 1,509 7,772 16,817 21,235 23,628

% chg 4.9 (61.6) 414.9 116.4 26.3 11.3

(% of Net Sales) 11.1 2.1 8.4 13.7 13.2 12.6

Depreciation & Amortization 782 2,507 3,887 4,656 5,554 6,357

EBIT 3,150 (997) 3,885 12,162 15,681 17,271

% chg 3.0 - - 213.1 28.9 10.1

(% of Net Sales) 8.9 (1.4) 4.2 9.9 9.7 9.2

Interest & other Charges 913 2,171 2,465 2,385 2,463 2,263

Other Income 619 748 1,058 452 412 485

(% of PBT) 20.1 (35.1) 30.0 4.3 3.0 3.1

Recurring PBT 2,856 (2,420) 2,478 10,228 13,630 15,493

% chg (7.4) - - 312.8 33.3 13.7

Extraordinary Expense/(Inc.) (230) (291) (1,045) (209) 0 0

PBT (reported) 3,086 (2,129) 3,523 10,437 13,630 15,493

Tax 852 336 1,006 1,216 2,794 3,254

(% of PBT) 27.6 (15.8) 28.6 11.7 20.5 21.0

PAT (reported) 2,235 (2,465) 2,517 9,221 10,836 12,240

Add: Share of earnings of asso. 65 (52) 85 101 50 80

Less: Minority interest (MI) 132 (11) 30 49 85 94

PAT after MI (reported) 2,168 (2,505) 2,571 9,274 10,801 12,226

ADJ. PAT 1,937 (2,796) 1,526 9,065 10,801 12,226

% chg (10.6) - - 494.0 19.2 13.2

(% of Net Sales) 5.5 (3.9) 1.6 7.4 6.7 6.5Basic EPS (`) 11.2 (9.7) 9.0 29.2 34.0 38.5

Fully Diluted EPS (̀ ) 10.0 (10.9) 5.3 28.6 34.0 38.5

% chg (82.1) - - 434.1 19.2 13.2




11February 15, 2012

Balance sheet (consolidated)


SOURCES OF FUNDS

Equity Share Capital 386 514 571 635 635 635Reserves & Surplus 8,312 5,427 7,827 18,537 25,660 34,186

Shareholders’ Funds 8,698 5,941 8,398 19,171 26,294 34,821

Minority Interest 468 403 214 247 247 247

Total Loans 11,585 34,974 35,108 32,791 30,791 28,291

Deferred Tax Liability 974 680 1,154 1,464 1,464 1,464

Total Liabilities 21,725 41,998 44,873 53,673 58,796 64,823

APPLICATION OF FUNDS

Gross Block 12,976 58,469 63,823 71,463 85,440 97,792

Less: Acc. Depreciation 6,060 33,269 34,232 39,699 45,252 51,609

Net Block 6,915 25,200 29,590 31,764 40,188 46,184

Capital Work-in-Progress 5,948 10,533 8,916 11,729 11,107 11,735

Goodwill 566 3,719 3,423 3,585 3,585 3,585

Investments 2,666 1,257 2,219 2,544 2,646 2,723

Current Assets 19,244 33,322 42,446 51,035 62,258 69,761

Cash 3,833 4,121 8,743 10,948 7,578 6,381

Loans & Advances 10,056 13,456 15,199 19,139 25,030 28,974

Other 5,355 15,745 18,503 20,948 29,650 34,405

Current liabilities 13,621 32,120 41,721 46,984 60,987 69,164

Net Current Assets 5,623 1,202 725 4,051 1,270 597

Mis. Exp. not written off 7 86 - - - -

Total Assets 21,725 41,998 44,873 53,673 58,796 64,823




12February 15, 2012

Cash flow statement (consolidated)


Profit before tax 3,086 (2,129) 3,523 10,437 13,630 15,493

Depreciation 782 2,507 3,887 4,656 5,554 6,357Change in Working Capital 4,003 4,709 5,099 (1,122) (589) (523)

Less: Others (820) (3,263) (1,448) (1,063) - -

Other income (619) (748) (1,058) (452) (412) (485)

Direct taxes paid (852) (336) (1,006) (1,216) (2,794) (3,254)

Cash Flow from Operations 5,581 739 8,997 11,240 15,388 17,588

(Inc.)/Dec. in Fixed Assets (5,983) (50,078) (3,736) (10,453) (13,356) (12,980)

(Inc.)/Dec. in Investments (1,491) 1,408 (962) (325) (102) (77)

Other 619 748 1,058 452 412 485

Cash Flow from Investing (6,855) (47,922) (3,640) (10,327) (13,045) (12,572)

Issue of Equity - 3,958 1,405 4,700 - -

Inc./(Dec.) in loans 4,283 23,389 135 (2,317) (2,000) (2,500)

Dividend Paid (Incl. Tax) 688 677 365 1,002 3,713 3,713

Other 1,018 (19,448) 3,113 2,094 - -

Cash Flow from Financing 3,953 47,471 (1,209) 1,291 (5,713) (6,213)

Inc./(Dec.) in Cash 2,679 288 4,148 2,205 (3,370) (1,197)

Opening Cash balances 1,154 3,833 4,121 8,743 10,948 7,578

Closing Cash balances 3,833 4,121 8,743 10,948 7,578 6,381




13February 15, 2012

Key ratios

Y/E March FY08 FY09 FY10 FY11 FY12E FY13E

Valuation Ratio (x)

P/E (on FDEPS) 28.5 - 53.5 10.0 8.4 7.4

P/CEPS 18.3 1762 15.1 6.6 5.6 4.9

P/BV 6.4 12.6 10.0 4.8 3.5 2.6

Dividend yield (%) 1.0 0.4 1.1 1.4 3.5 3.5

EV/Sales 2.4 1.6 1.2 0.9 0.7 0.6

EV/EBITDA 24.4 79.8 14.8 6.6 5.2 4.7

EV / Total Assets 4.4 2.9 2.6 2.1 1.9 1.7

Per Share Data (`)EPS (Basic) 10.0 (10.9) 5.3 28.6 34.0 38.5

EPS (fully diluted) 6.8 (9.8) 5.3 31.8 37.9 38.5

Cash EPS 15.6 0.2 19.0 43.2 51.5 58.6DPS 3.0 1.2 3.0 4.0 10.0 10.0

Book Value 27.3 18.4 25.9 60.0 82.4 109.3

DuPont Analysis

EBIT margin 8.9 (1.4) 4.2 9.9 9.7 9.2

Tax retention ratio 0.7 1.2 0.7 0.9 0.8 0.8

Asset turnover (x) 2.4 2.7 2.6 3.3 3.7 3.6

ROIC (Post-tax) 15.8 (4.5) 7.9 29.1 28.2 26.2

Cost of Debt (Post Tax) 7.0 10.8 5.0 6.2 6.2 6.1

Leverage (x) 0.6 2.4 3.7 1.6 0.9 0.7

Operating ROE 21.1 (40.6) 18.7 65.3 47.5 39.4

Returns (%)

ROCE (Pre-tax) 16.7 (3.1) 8.9 24.7 27.9 27.9

Angel ROIC (Pre-tax) 20.7 (2.7) 11.5 30.4 32.4 31.1

ROE 23.6 (38.2) 21.3 65.8 47.5 40.0

Turnover ratios (x)

Asset Turnover (Gross Block) 3.0 2.0 1.5 1.8 2.1 2.0

Inventory / Sales (days) 33 37 44 38 38 41

Receivables (days) 19 18 24 21 23 23

Payables (days) 116 123 134 110 110 110

Working capital cycle (ex-cash) (days) 39 (3) (22) (22) (15) (12)

Solvency ratios (x)

Net debt to equity 0.6 5.0 2.9 1.0 0.8 0.6

Net debt to EBITDA 1.3 19.6 3.1 1.1 1.0 0.8

Interest Coverage (EBIT / Interest) 3.5 (0.5) 1.6 5.1 6.4 7.6




Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement Tata Motors

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