Aug 23, 2010

Tata Motors - Q1FY11 Result Update

Ø        Tata Motors Ltd (TML) reported a 64% YoY increase in consolidated operating income to INR 270.6 billion. It was however down 7% sequentially.
Ø        Consolidated EBITDA margins improved 850 basis points (bps) on an annual basis and 330 bps sequentially.
Ø        Consolidated net profit came at INR 19.8 billion much higher than expectations. This was in comparison to a loss of 3.3 billion last year.

Valuation & Outlook

At the CMP of INR 1015 the stock trades at ~11x FY11e EPS. The stock looks reasonably priced at this juncture and we would recommend investors to accumulate the stock with a price target of INR 1,120. (10x FY12e)