Tata Motors
Reco: ACCUMULATE
CMP: Rs1,080
Target Price: Rs1,235
JLR to drive the performance, Maintain ACCUMULATE
· Strong demand outlook for FY11/FY12, driven by LCVs. JLR continues to suffer with engine shortage. No major pre buying is visible in M&HCVs. Nano's order backlog is almost over
· Domestic business to witness cost pressures. JLR margins are sustainable but for currency fluctuations. Price hike due to emission norms is not yet decided
· We believe that momentum in M&HCV to peak out, expect concerns for FY12 volumes to set in 3Q/4QFY11. However JLR to more than compensate for downside risk in M&HCVs
· Upgrading FY11/FY12 EPS estimates by 10%/13% to Rs110.6/Rs137.8 due to upgrade in JLR est. Raise our SOTP based TP to Rs1,235 (up by 8%), maintain ACCUMULATE
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