RESULTS REVIEW 1QFY16

8 AUG 2015

Tata Motors
BUY
INDUSTRY

AUTOS

CMP (as on 07 Aug 2015)

Rs 393

Target Price

Rs 515

Nifty

8,565

Sensex

28,236

KEY STOCK DATA

Bloomberg/Reuters TTMT IN/TAMO.BO
No. of Shares (mn)

3,396

MCap (Rs bn) / ($mn)

1,335/20,854

6m avg traded value (Rs mn)

3,129

STOCK PERFORMANCE (%)

52 Week high / low

Rs 606 / 366
3M

6M

12M

Absolute (%)

(19.4) (28.9)

(10.0)

Relative (%)

(25.6) (27.3)

(20.4)

SHAREHOLDING PATTERN (%)

Promoters

34.35

FIs & Local MFs

16.45

FIIs

20.19

Public & Others

28.71

Source : BSE

JLR disapoints; India business recovering

Tata Motors 1QFY16 operating performance was
weaker than expected as JLRs adjusted EBITDA
declined by 29% YoY to GBP 774mn, partially offset
by robust standalone operations (EBITDA margin at
4.7%, +200bps QoQ). Even while JLRs gross margin
improved by 350bps YoY, its EBITDA margin declined
by 480bps YoY to 15.5% as a result of multiple factors
including negative operating leverage, inferior
regional mix, front loaded costs for its new engine
facility and weaker pricing in China market. Further,
JLR reported negative FCF (GBP 818mn), largely led
by adverse changes in its working capital cycle.
In our view, JLRs volume momentum and margins
should recover from 2HFY16, based on ramp-up of its
new launches (XE, new XF, F-Pace) and steady rise in
CJLR volumes post remedial actions being taken. We
remain cognizant of the demand/pricing headwinds
in China, however, we feel that these concerns have
been adequately factored in. We cut our FY16/17E by
~7% and TP to Rs 515 (earlier Rs 577). Maintain BUY.

and engine insourcing efforts, JLR would be able bring

down its costs on a structural basis. However, part of
these savings will need to be reinvested in
fixed/variable marketing spends in view of the demand
challenges across some of its key markets.

JLRs capex is likely to remain in the vicinity of 15-16%

of sales for the next couple of years. The company
reckons that working capital will continue to positively
influence its operating cash flows, despite the shorter
payment terms with dealers in China.

JLR has witnessed healthy volume growth in most key

regions including Europe, UK and North America. ExChina volumes have grown by 12.5% YoY in 1QFY16.

Mgt hopes to achieve break-even in the standalone

business by next year. MHCV volume growth continues
to be driven by replacement demand. Company
expects LCV segment to recover from 4QF16 onwards

CONSOLIDATED FINANCIAL SUMMARY

(Rs bn)

1QFY16

1QFY15

YoY (%)

4QFY15

QoQ (%)

FY14

FY15

FY16E

FY17E

610.2

646.8

(5.7)

675.8

(9.7)

2,328

2,628

2,702

3,105

EBITDA

98.2

117.4

(16.4)

92.5

6.1

348

395

405

472

APAT

28.9

53.0

(45.6)

18.8

53.7

150

145

155

195

8.5

16.6

(48.9)

5.8

45.7

46.5

45.0

45.7

57.5

14.8

17.6

20.4

12.1

4.6

4.2

4.5

3.6

29.0

23.8

22.8

21.9

Net Sales

Diluted EPS (Rs)

P/E (x)*

Navin Matta
[email protected]
+91-22-6171-7322

Key highlights for the quarter

Mgt highlighted that with its platform consolidation

EV / EBITDA (x)*
RoE (%)

Source: Company, HDFC sec Inst Research. * P/E and EV/EBITDA adjusted for R&D capitalization at 30% which is inline with luxury car makers

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

TATA MOTORS : RESULT REVIEW 1QFY16

QUARTERLY FINANCIALS SNAPSHOT (CONSOLIDATED)
(Rs mn)

Consol topline declined by 6%

YoY on the back of JLRs weak
volumes during the quarter

Fx gains from revaluation of

JLRs debt and ineffective
hedges is shown above EBITDA
level in IGAAP. Hence, EBITDA
appears inflated to this extent

1QFY16

1QFY15

YoY (%)

4QFY15

QoQ (%)

Net Sales

6,10,195

6,46,828

(5.7)

6,75,760

(9.7)

Material Expenses

3,50,629

3,97,362

(11.8)

4,05,185

(13.5)

Employee Expenses

69,792

58,225

19.9

67,831

2.9

Other Operating Expenses

91,624

73,837

24.1

1,10,242

(16.9)

EBITDA

98,150

1,17,404

(16.4)

92,503

6.1

Interest Cost

11,174

9,416

18.7

18,946

(41.0)

Depreciation

38,232

29,796

28.3

38,568

(0.9)

Other Income

3,072

2,132

44.1

2,452

25.3

7,062

5,980

18.1

8,120

(13.0)

44,754

74,344

(39.8)

29,322

52.6

1,074

(940)

(214.2)

683

57.2

Tax

15,703

21,151

(25.8)

10,236

53.4

PAT

27,978

54,134

(48.3)

18,403

52.0

50

48

3.5

30

68.8

(245)

(200)

22.7

(339)

(27.6)

RPAT (after minority interest)

27,783

53,982

(48.5)

18,094

53.5

APAT (after minority interest)

28,856

53,042

(45.6)

18,777

53.7

8.5

16.6

(48.9)

5.8

45.7

1QFY16

1QFY15

YoY (bps)

4QFY15

QoQ (bps)

Material Expenses as % of Net Sales

57.5

61.4

(397)

60.0

(250)

Employee Expenses as % of Net Sales

11.4

9.0

244

10.0

140

Other Expenses as % of Net Sales

15.0

11.4

360

16.3

(130)

EBITDA Margin (%)

16.1

18.2

(207)

13.7

240

4.6

8.3

(379)

2.7

188

35.1

28.4

664

34.9

18

Product development expense

PBT
Exceptional item

Profit in respect of investments in Associate Companies

Minority interest

Adj EPS
Source: Company, HDFC sec Inst Research

Net Auto Debt stands at 0.63x,

which appears fairly
comfortable

MARGIN ANALYSIS (CONSOLIDATED)

Net Profit Margin (%)

Tax Rate (%)
Source: Company, HDFC sec Inst Research

Page | 2

TATA MOTORS : RESULT REVIEW 1QFY16

QUARTERLY FINANCIALS SNAPSHOT (STANDALONE)
(Rs mn)

Standalone net sales rose by

21% YoY, primarily driven by
strong MHCV volumes
Gross margins expanded by
370bps YoY (~120bps QoQ).
Cost reduction efforts were
visible as seen through decline
in staff and other expenses as
percentage to sales. EBITDA
margin expansion was well
above expectations at 4.7%
Mgt mentioned that PV
capacity utilization stands at
~35%, which is still below its
50% break-even utilization
level. The company appears
hopeful of achieving breakeven in standalone operations
in a years time
Company plans to invest Rs 3540bn over next few years. Bulk
of these spends are likely to be
used for product development

1QFY16

1QFY15

YoY (%)

4QFY15

QoQ (%)

CV (Domestic, in units)

71,414

75,165

(5.0)

84,126

(15.1)

PV (Domestic, in units)

31,586

24,582

28.5

41,853

(24.5)

Exports (in units)

13,510

10,227

32.1

13,291

1.6

1,16,510

1,09,974

5.9

1,39,270

(16.3)

Net Sales

92,970

77,048

20.7

1,07,843

(13.8)

Material Expenses

65,328

57,015

14.6

77,050

(15.2)

Total volumes (in units)

7,700

7,396

4.1

8,362

(7.9)

15,537

14,823

4.8

19,438

(20.1)

EBITDA

4,405

(2,185)

(301.6)

2,993

47.2

Interest Cost

4,276

3,398

25.8

4,709

(9.2)

Depreciation

6,118

5,408

13.1

8,233

(25.7)

Other Income

9,802

15,972

(38.6)

831

1,080.0

943

796

18.5

1,403

(32.8)

2,870

4,184

(31.4)

(10,521)

94

248

(61.9)

212

(55.4)

Employee Expenses
Other Operating Expenses

Product development expense

PBT
Exceptional item
Tax

112

78

43.3

PAT

2,664

3,937

(32.3)

(10,811)

APAT

2,758

4,184

(34.1)

(10,600)

0.8

1.2

(38.0)

(3.6)

1QFY16

1QFY15

YoY (bps)

4QFY15

QoQ (bps)

Material Expenses as % of Net Sales

70.3

74.0

(373.2)

71.4

(117.9)

Employee Expenses as % of Net Sales

8.3

9.6

(131.6)

7.8

52.8

16.7

19.2

(252.7)

18.0

(131.2)

EBITDA Margin (%)

4.7

(2.8)

757.4

2.8

196.2

Net Profit Margin (%)

3.0

5.4

(246.4)

(9.8)

1,279.6

Tax Rate (%)

3.9

390.9

(0.7)

465.3

EPS
Source: Company, HDFC sec Inst Research

MARGIN ANALYSIS (STANDALONE)

Other Expenses as % of Net Sales

Source: Company, HDFC sec Inst Research

Page | 3

TATA MOTORS : RESULT REVIEW 1QFY16

QUARTERLY FINANCIALS SNAPSHOT (JLR - IFRS)

JLRs net sales declined by 7%

YoY as a result of lower
volumes and decline in Net ASP
on the back of lower mix of
revenue from China

In GBP mn

1QFY16

1QFY15

YoY (%)

4QFY15

QoQ (%)

Retail volumes (000 units)

114.9

115.6

(0.6)

126.4

(9.1)

Wholesale volumes (000 units)

110.6

115.2

(3.9)

124.8

(11.3)

Revenue

5,002

5,353

(6.6)

5,826

(14.1)

Material Expenses

2,906

3,299

(11.9)

3,417

(15.0)

552

429

28.7

550

0.4

Other Operating Expenses

1,038

811

28.0

1,151

(9.8)

Product development expense

(315)

(273)

15.4

(308)

2.3

821

1,087

(24.5)

1,016

(19.2)

Employee Expenses

Gross margins expanded by

350bps YoY. However negative
operating leverage and higher
variable marketing expenses
resulted in EBITDA margin
declining by ~480bps YoY

EBITDA
Interest Cost

14

(1)

(1,500.0)

92

(84.8)

Depreciation

318

234

35.9

308

3.2

(149)

(70)

112.9

220

(167.7)

638

924

(31.0)

396

61.1

Tax

146

231

(36.8)

94

55.3

APAT

492

693

(29.0)

302

62.9

1QFY16

1QFY15

YoY (bps)

4QFY15

QoQ (bps)

Material Expenses as % of Net Sales

58.1

61.6

(353.2)

58.7

(55.4)

Employee Expenses as % of Net Sales

11.0

8.0

302.1

9.4

159.5

Other Expenses as % of Net Sales

20.8

15.2

560.1

19.8

99.5

EBITDA Margin (%)

16.4

20.3

(389.3)

17.4

(102.6)

9.8

12.9

(311.0)

5.2

465.2

22.9

25.0

(211.6)

23.7

(85.3)

Debt/unrealised MTM loss/(gain)

PBT

JLR received GBP 62mn of local

incentives from China in
1QFY16. Adjusted for this, JLRs
EBITDA margin came off to
15.5%
Per the company, there was
GBP 50mn YoY positive swing in
net fx gains for the quarter
JLR reported negative FCF of
GBP 818mn driven by negative
change in its working capital.
Mgmt alluded this to building
inventory for new models XE,
XF, rising inventory in China
and shortening for dealer
payment cycle

Exceptional item

Source: Company, HDFC sec Inst Research

MARGIN ANALYSIS (JLR IFRS)

Net Profit Margin (%)

Tax Rate (%)
Source: Company, HDFC sec Inst Research

Page | 4

TATA MOTORS : RESULT REVIEW 1QFY16

We have cut our wholesale

volume estimates to reflect
the weak demand
conditions in China market.
We have also assumed that
the premium margins in
China would decline by 40%
over FY15-17E and hence
lowered our EBITDA margins
for FY16/FY17 to
17.1%/16.7%
We now expect JLRs EBITDA
to remain flattish over FY1517E.

JLR : KEY FINANCIAL HIGHLIGHTS / MODEL ASSUMPTIONS

in Mn
Revenue
% growth (YoY)
Wholesales volumes (in '000)
% growth
Net ASP
% growth in Realizations
Expenditure
Material cost
% of sales
Employee cost
% of sales
Other expenses
% of sales
Addback R&D Cost
% of sales
R&D cost expensed
Total
% of sales
EBITDA
% of sales
Other Income
Depreciation and amortization
Interest expense
Forex gain/(loss)
Share of profit/(loss) from joint venture
% of sales
PBT
% of sales
Tax
Tax rate %
APAT
% of sales
RPAT
% of sales

FY13
15,784
16.8
372
18.3
42,422
(1.3)

FY14
19,386
22.8
430
15.5
45,098
6.3

FY15
21,866
12.8
471
9.5
46,875
3.9

FY16E
22,023
0.7
525
11.6
44,581
(4.9)

FY17E
25,104
14.0
629
19.7
44,550
(0.1)

9,904
62.8
1,334
8.5
3,075
19.5
(1,058)
(6.7)
198
13,453
85.2
2,330.6
14.8
70
622
(16)
(109)
(12)
(0.1)
1,674
10.6
460
27.5
1,214
7.7
1,214
7.7

11,904
61.4
1,654
8.5
3,465
17.9
(1,266)
(6.5)
236
15,993
82.5
3,393.0
17.5
875
147
137
(7)
(0.0)
2,501
12.9
622
24.9
1,879
9.7
1,879
9.7

13,185
60.3
1,977
9.0
3,730
17.1
(1,411)
(6.5)
253
17,734
81.1
4,132.0
18.9
1,051
87
(373)
(7)
(0.0)
2,614
12.0
576
22.0
2,038
9.3
2,038
9.3

12,729
57.8
2,312
10.5
4,669
21.2
(1,760)
(8.0)
317
18,267
82.9
3,755.5
17.1
1,327
47
149
(20)
(0.1)
2,511
11.4
618
24.6
1,892
8.6
1,892
8.6

14,811
59.0
2,561
10.2
4,955
19.7
(1,815)
(7.2)
399
20,911
83.3
4,192.7
16.7
1,576
42
27
0.1
2,602
10.4
644
24.8
1,957
7.8
1,957
7.8

Source: Company, HDFC sec Inst Research

Page | 5

TATA MOTORS : RESULT REVIEW 1QFY16

STANDALONE : KEY FINANCIAL HIGHLIGHTS/ MODEL ASSUMPTIONS
Rs in Mn

Our standalone topline growth

estimate remains largely
unchanged

FY13

FY14

FY15E

FY16E

FY17E

CV (Domestic)

5,40,124

3,81,412

3,29,943

3,49,872

4,09,134

PV (Domestic)

2,19,139

1,35,287

1,33,304

1,80,000

2,11,000

50,217

49,892

49,917

56,298

63,415

8,09,480

5,66,591

5,13,164

5,86,170

6,83,549

(10.5)

(30.0)

(9.4)

14.2

16.6

4,89,270

3,73,769

3,91,201

4,71,069

5,69,001

(17.0)

(23.6)

4.7

20.4

20.8

Vehicle sales (in units)

Exports
Total

However, on the back of strong

1QFY16 performance, we have
raised our EBITDA margin
estimates for the company to
5.1%/6.9% for FY16/FY17E

% YoY

On ex-JLR dividend basis, we

expect standalone PBT loss to
narrow down to Rs 16bn/5bn
over FY16-17E

Sales
% growth(YoY)
Less: excise duty

45,540

34,699

32,296

44,752

54,055

% of sales

9.3

9.3

8.3

9.5

9.5

Net Sales

4,43,730

3,39,070

3,58,905

4,26,317

5,14,946

% YoY

(18.0)

(18.0)

(18.0)

(18.0)

(18.0)

Other operating income

3,927

3,811

4,042

4,447

4,891

4,47,657

3,42,881

3,62,948

4,30,764

5,19,837

3,29,651

2,59,144

2,70,417

3,05,842

3,66,485

Total income from operations

Expenditure
RM Cost
% of sales
Employee cost
% of sales
Other
% of sales
Total expenses
% of sales
EBITDA
% of sales
Other Income
Product Development Expenses

73.6

75.6

74.5

71.0

70.5

28,370

28,777

30,915

34,341

40,085

6.3

8.4

8.5

8.0

7.7

68,199

59,784

66,518

68,459

77,497

15.2

17.4

18.3

15.9

14.9

4,26,220

3,47,705

3,67,849

4,08,642

4,84,067

87.1

93.0

94.0

86.7

85.1

21,437

(4,824)

(4,901)

22,122

35,771

4.8

(1.4)

(1.4)

5.1

6.9

20,882

18,669

18,815

21,778

19,844

4,258

4,287

4,375

4,500

4,800

Depreciation / Amortisation

18,176

20,703

26,032

26,990

30,411

Interest and Discounting Charges (net)

13,877

13,532

16,117

14,054

10,674

6,008

(24,677)

(32,610)

(1,644)

9,730

(7,828)

(38,230)

(47,460)

(16,344)

(4,970)

PBT (pre-exceptional items)

PBT (pre-exceptional items and JLR dividend)
Source: Company, HDFC sec Inst Research

Page | 6

TATA MOTORS : RESULT REVIEW 1QFY16

SOTP VALUATION

We have cut our target

price to Rs 515 (earlier Rs
577) to reflect lower
volumes and margins for
JLR in China market

Valuation methodology

Multiple

Per share

Standalone

EV / EBIDTA on FY17E

8.0

84

JLR

EV / EBIDTA on FY17E

4.5

422

China JV

EV / EBIDTA on FY17E

4.5

12

Other subsidiaries

P/E, PBV on FY17E

28

Less: Net Automotive Debt

(31)

Target Price

515

Source: HDFC sec Inst Research

We have cut our consol

EPS estimates by ~7% for
FY16/FY17E to reflect
lower volume growth and
margin in the JLR business.
This has been partly offset
by increase in our
standalone estimates

CHANGE IN ESTIMATES
In Rs bn

New

Old

% chg

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

2,702

3,105

2,805

3,190

(3.7)

(2.7)

EBITDA

405

472

427

501

(5.2)

(5.7)

Adj PAT

155

195

167

211

(7.1)

(7.4)

Adj EPS

45.7

57.5

49.1

62.1

(7.1)

(7.4)

Net Sales

Source: HDFC sec Inst Research

Page | 7

TATA MOTORS : RESULT REVIEW 1QFY16

UK

Share of RR+RRS % - RHS

30.0%
25.0%

60%

20.0%
40%

15.0%
10.0%

20%

5.0%

80%
60%
40%
20%
0%

2QFY14

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

0.0%
2QFY14

0%

100%

1QFY16

80%

ROW

4QFY15

35.0%

Europe

3QFY15

40.0%

China

2QFY15

100%

NA

1QFY15

Land Rover

4QFY14

Jaguar

JLR China mix has seen a sharp decline

3QFY14

JLR Model mix was slightly weaker

Source: Company, HDFC sec Inst Research

Source: Company, HDFC sec Inst Research

TTMT MHCV market share declined modestly

TTMT PV market share steady over past 4-5 quarters

Source: SIAM, HDFC sec Inst Research

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

20
10
0
1QFY16

10

4QFY15

15

30

3QFY15

20

40

2QFY15

25

50

1QFY15

30

M/S - RHS
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%

4QFY14

35

Volumes (in '000)

60

3QFY14

40

59.0%
58.0%
57.0%
56.0%
55.0%
54.0%
53.0%
52.0%
51.0%
50.0%
49.0%

2QFY14

M/S - RHS

Volumes (in '000)

45

Source: SIAM, HDFC sec Inst Research

Page | 8

TATA MOTORS : RESULT REVIEW 1QFY16

INCOME STATEMENT : CONSOLIDATED

BALANCE SHEET : CONSOLIDATED

(Rs bn)

FY13

FY14

FY15

FY16E

FY17E

(Rs bn)

Net Sales

1,888

2,328

2,628

2,702

3,105

SOURCES OF FUNDS

Growth (%)
Material Expenses
Employee Expenses

14.0

23.3

12.9

2.8

14.9

1,201

1,436

1,599

1,579

1,845

166

216

255

290

322

FY13

FY14

FY15

FY16E

FY17E

Share Capital

6.4

6.4

6.4

6.8

6.8

Reserves

370

650

556

792

977

Total Shareholders Funds

376

656

563

799

984

Product Development Exps

20

26

29

35

43

Minority Interest

Other Operating Expenses

255

303

349

392

423

Long Term Debt

536

606

736

690

716

EBIDTA

246

348

395

405

472

Short Term Debt

EBIDTA (%)

13.0

15.0

15.0

15.0

15.2

Total Debt

536

606

736

690

716

EBIDTA Growth (%)

10.2

41.6

13.5

2.4

16.6

Deferred Taxes

(24)

(8)

(14)

14

Other Income

12

11

Depreciation

76

111

134

161

188

TOTAL SOURCES OF FUNDS

178

246

271

256

295

APPLICATION OF FUNDS

36

47

49

36

34

143

199

222

220

261

EBIT
Interest
PBT
Tax

38

48

76

62

67

PAT

104.7

150.9

145.5

157.9

193.8

APAT Growth (%)

Profit in respect of investments
in Associate Companies
Minority Interest

(17.0)

44.1

(3.5)

8.5

22.7

(1)

(2)

(1)

(1)

(1)

(1)

(1)

105

150

145

155

195

EO items (net of tax)

(6)

(10)

(5)

15

Reported PAT (after MI)

99

140

140

170

195

32.9

46.5

45.0

45.7

57.5

(16.8)

41.4

(3.3)

1.5

26.0

Adj PAT (after MI)

Adj EPS
Adj EPS Growth (%)
Source: Company, HDFC sec Inst Research

Long Term Provisions & Others

892

1,259

1,289

1,501

1,720

Net Block

511

641

838

1,021

1,187

CWIP

186

336

289

289

284

Goodwill

41

50

47

47

47

Investments, LT Loans & Advances

91

107

153

153

153

Inventories

210

273

293

295

339

Debtors

109

106

126

113

129

Cash & Equivalents

211

297

321

300

330

ST Loans & Advances, Others

298

367

293

321

353

Total Current Assets

828

1,043

1,032

1,030

1,152

Creditors

603

716

858

821

877

Other Current Liabilities & Provns

161

202

212

218

227

Total Current Liabilities

764

918

1,070

1,039

1,103

64

125

(38)

(9)

48

892

1,259

1,289

1,501

1,720

Net Current Assets

Misc Expenses & Others
TOTAL APPLICATION OF FUNDS
Source: Company, HDFC sec Inst Research

Page | 9

TATA MOTORS : RESULT REVIEW 1QFY16

CASH FLOW : CONSOLIDATED

(Rs bn)

KEY RATIOS : CONSOLIDATED

FY13

FY14

FY15

FY16E

FY17E

99

140

140

170

195

PAT from Operations

99

140

140

170

195

Interest expenses

36

47

49

36

34

Depreciation

76

111

134

161

188

Working Capital Change

49

25

187

(49)

(28)

Other Operating Items

17

(6)

22

Reported PAT
Non-operating & EO items

OPERATING CASH FLOW ( a )

259

339

503

340

397

(209)

(400)

(281)

(344)

(350)

Free cash flow (FCF)

51

(61)

223

(4)

47

Investments

(1)

(16)

(47)

(210)

(416)

(327)

(344)

(350)

Capex

INVESTING CASH FLOW ( b )

Debt Issuance

64

71

130

(47)

26

Interest expenses

(36)

(47)

(49)

(36)

(34)

FCFE

115

10

352

(51)

73

(233)

74

(7)

(7)

(8)

Other Financing Items

(44)

143

FINANCING CASH FLOW ( c )

(21)

163

(152)

29

86

24

(21)

29

211

297

321

300

330

Share capital Issuance

Dividend

NET CASH FLOW (a+b+c)

Non-operating and EO items
Closing Cash & Equivalents
Source: Company, HDFC sec Inst Research

FY13

FY14

FY15

FY16E

FY17E

GPM

36.4

38.3

39.1

41.5

40.6

EBITDA Margin

13.0

15.0

15.0

15.0

15.2

5.2

6.0

5.3

6.3

6.3

RoE

29.8

29.0

23.8

22.8

21.9

RoIC

20.6

20.8

20.7

16.6

16.9

RoCE

15.3

17.0

13.8

13.0

13.8

26.5

24.0

34.4

28.2

25.7

Asset Turnover (x)

2.1

1.8

2.0

1.8

1.8

Inventory (days)

41

43

41

40

40

Debtors (days)

21

17

17

15

15

PROFITABILITY (%)

APAT Margin

EFFICIENCY
Tax Rate (%)

Payables (days)

117

112

119

111

103

Cash Conversion Cycle (days)

(55)

(53)

(61)

(56)

(48)

Debt/EBITDA (x)

2.2

1.7

1.9

1.7

1.5

Net D/E

0.2

0.1

0.2

0.1

0.1

(10)

Interest Coverage

5.0

5.2

5.6

7.0

8.7

PER SHARE DATA

(17)

(18)

EPS (Rs/sh)

32.9

46.5

45.0

45.7

57.5

CEPS (Rs/sh)

51.3

72.7

78.8

90.1

104.6

DPS (Rs/sh)

2.0

2.0

2.0

2.5

118.0

203.8

174.8

235.2

289.8

P/E*

21.5

14.8

17.6

20.4

12.1

P/BV

3.3

1.9

2.2

1.7

1.4

EV/EBITDA*

6.7

4.6

4.2

4.5

3.6

OCF/EV (%)

19.4

26.1

36.7

23.8

28.3

FCF/EV (%)

3.8

(4.7)

16.2

(0.3)

3.4

FCFE/mkt cap (%)

9.2

0.8

27.9

(3.8)

5.5

Dividend Yield (%)

0.5

0.5

0.5

0.6

BV (Rs/sh)
VALUATION

Source: Company, HDFC sec Inst Research * P/E based on earnings adjusted for 30% R&D
capitalization which is inline with luxury car makers. EV/EBITDA based on EV less net auto debt
and adjusted EBITDA

Page | 10

TATA MOTORS : RESULT REVIEW 1QFY16

RECOMMENDATION HISTORY
Tata Motors

700

Date
17-Nov-14
21-Jan-15
6-Feb-15
10-Jul-15
8-Aug-15

TP

650
600
550

CMP
524
559
589
398
393

Reco
BUY
BUY
BUY
BUY
BUY

Target
626
661
658
577
515

500
450
400
350

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

Sep-14

Aug-14

300

Rating Definitions
BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Page | 11

TATA MOTORS : RESULT REVIEW 1QFY16

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Page | 12