tata motors (tatmot - icici directcontent.icicidirect.com/mailimages/idirect_tatamotors... ·...

February 27, 2017

ICICI Securities Ltd | Retail Equity Research

Result Update

Dismal performance; negatives factored in... • Tata Motors’ (TML) Q3FY17 results came in below our estimates.

Consolidated revenues came in at | 67531 crore (down 4.3% YoY, up 2.5% QoQ), above our estimate of | 66696 crore. JLR’s net revenue of £6537 million (mn) (up 13% YoY, 9.8% QoQ) was above our estimate of £6167 mn, with the beat attributable to higher than expected volumes. JLR wholesale volumes were at 152245 units (including China JV), up 1.2% YoY, 9.3% QoQ vs. our estimate of 147,933 units. Standalone revenues came in at | 10,220 crore (up 1.8% YoY, down 1%QoQ) vs. our estimate of | 10,829 crore

• Reported consolidated EBITDA margins were at 8.8% (our estimates-14.1%) against 12.5% in Q3FY16 & 9.5% in Q2FY17. JLR’s EBITDA margin for Q3FY17 was at 9.3%, lower than our estimate of 13%. JLR’s operating performance for the quarter was below estimate due to 1) weaker product mix (run out of Discovery-~200 bps) 2) unfavourable variable marketing expense (~170 bps) 3) higher new model launch costs (~30 bps) & biennial pay negotiation settlement(~40 bps). Standalone EBITDA margin came in at 1.5% (down 345 bps YoY, 146 bps QoQ) against our estimate of 3.2%

• The company reported a consolidated PAT of | 112 crore (our estimate: | 2733 crore) against | 2953 crore in Q3FY16 & | 848 crore in Q2FY17. JLR reported a PAT of £167 mn against our estimate of £314 mn. The miss on PAT can mainly be attributed to lower EBITDA margins & unfavourable unrealised forex & commodity hedge revaluation as well as US dollar debt revaluation. The standalone loss was at | 1046 crore against our estimated loss of | 508 crore mainly due to lower EBITDA margins

JLR strong model cycle to spur volume growth Despite the dismal quarter, management was confident of the volume growth momentum to continue. on the back of 1) strong product cycle (recently launched XE & F-Pace; Land Rover will recover in H2FY17 with the launch of Evoque Convertible, new Discovery in Q4FY17E, midsize Range Rover (RR) in mid-FY18 & mid-cycle refresh of RR/RR Sport 2) long term benefit of modular strategy - more models on fewer platforms will reduce cost, 4) ramp up in China JV and 5) new production capacity in Slovakia. We have reduced the JLR margin estimates from 13.1%/15.9% in FY17/18E to 11.7%/14.2% because the management has reduced their guidance to ~14-15% due to headwinds of forex hedges. Standalone business-near term challenge M&HCV volumes are expected to grow in Q4FY17 on the back of pre-buying due to implementation of emission norms in April 2017. We expect M&HCV volume growth of 11% in FY18 on the back of growth in economic activity & higher infrastructure spend. However, there is a strong probability of announcement of some form of vehicle modernisation programme (ban of >10 year old vehicle), which will be an upside risk to our volume estimates. The company is aiming to increase market share in >16 T from ~55-56% to 60% in two years. On the PV side, TML plans to launch two models per year till 2020. Overall, we expect standalone volumes to grow 15% in FY18E. Long term story intact We value the stock on an SOTP basis, with JLR (ex-China JV) at 3.8x EV/EBIDTA basis contributing ~| 444/share while the domestic business contributes | 36/share. Inclusive of other subsidiaries, we arrive at a target price of | 535.

Rating matrix Rating : BuyTarget : | 535Target Period : 12 monthsPotential Upside : 17%

What’s Changed? Target Changed from | 595 to | 535EPS FY17E Changed from | 35.5 to | 19.2EPS FY18E Changed from | 61.3 to | 41.1Rating Unchanged

Quarterly Performance

Q3FY17 Q3FY16 YoY (%) Q2FY17 QoQ (%)Revenue 67,531.3 70,592.1 -4.3 65,900.4 2.5EBITDA 5,975.3 8,854.5 -32.5 7,024.5 -14.9EBITDA (%) 8.8 12.5 -369 bps 10.7 -181 bpsPAT 111.6 2,952.7 -96.2 848.2 -86.8

Key Financials | Crore FY15E FY16E FY17E FY18ENet Sales 260,734 272,646 272,483 310,180 EBITDA 42,114 41,851 32,127 43,289 Net Profit 13,986 12,638 6,507 13,959 EPS (|) 41.2 37.2 19.2 41.1

Valuation summary

FY15E FY16E FY17E FY18EP/E (x) 11.1 12.3 23.9 11.1 Target P/E (x) 13.0 14.4 27.9 13.0 EV/EBITDA (x) 4.1 3.8 5.1 3.8 P/BV (x) 2.8 1.9 1.6 1.4 RoNW (%) 24.9 15.3 6.7 12.5 RoCE (%) 22.8 17.0 8.7 14.2

Stock data Particular AmountMarket Capitalization | 152802 CroreTotal Debt (FY16) | 63099.9 CroreCash and Investments (FY16) | 53707.7 CroreEV (FY16) | 159079.7 Crore52 week H/L (|) 598 / 290Equity capital (| crore) | 679.1 CroreFace value (|) | 2

Price performance (%)

1M 3M 6M 12MTata Motors Ltd -13.2 -1.9 -8.3 45.1M&M Ltd 9.8 9.5 -9.6 8.0Maruti Suzuki India Ltd 5.8 23.6 24.8 72.9

Tata Motors (TATMOT) | 458

Research Analyst

Nishit Zota

[email protected]

Vidrum Mehta

[email protected]


Variance analysis- Consolidated Q3FY17 Q3FY17E Q3FY16 YoY (%) Q2FY17 QoQ (%) Comments

Total Operating Income 67,531 66,696 70,592 -4.3 65,900 2.5 Consolidated revenues came in below estimates as standalone revenues were below estimates due to lower than estimated ASPs

Raw Material Expenses 40,012 41,818 43,463 -7.9 39,276 1.9Employee Expenses 7,045 6,699 7,375 -4.5 6,794 3.7Other expenses 18834 13390 14298 31.7 17119 10.0

EBITDA 5,975.3 9,419 8,854.5 -32.5 7,025 -14.9EBITDA Margin (%) 8.8 14.1 12.5 -369 bps 10.7 -181 bps Margins came in lower due to lower than estimated JLR margins & standalone

margins.JLR's lower margins of 9.3% against our estimate of 13.5% was due to 1) Weaker product mix (run out of Discovery) 2) Unfavorable variable marketing expense 3) Higher new model launch costs & biennial pay negotiation settlement

Depreciation 4230.0 4450.3 4262.0 -0.8 4454.0 -5.0Interest 871 1007 1138 -23.5 1025 -15.0Product Development expenditure 814.1 914.7 853.5 -4.6 742.0 9.7Tax 867 645 669 29.6 425 104.2PAT 111.6 2732.9 2952.7 -96.2 848.2 -86.8 PAT was lower due to lower than estimated EBITDA marginsEPS (Diluted) 0.3 8.0 8.6 -96.2 2.5 -86.8Key MetricsJLR sales ( mn GBP) 6537 5959 5781 13.1 5953 9.8 The beat is attributable to higher than estimated volumes. JLR wholesale volumes

were at 152245 units (including China JV), up 1.2% YoY, 9.3% QoQ against our estimate of 147,933 units

JLR margins (%) 9.3 13.5 14.4 -508 bps 10.3 -98 bps JLR's lower margins of 9.3% against our estimate of 13.5% was due to 1) weaker product mix (run out of Discovery) 2) unfavourable variable marketing expense 3) higher new model launch costs & biennial pay negotiation settlement

JLR PAT (mn GBP) 167 341 440 -62.0 244 -31.6 The miss on PAT can mainly be attributed to lower EBITDA margins & unfavourable unrealised forex & commodity hedge revaluation as well as US$ debt revaluation

Domestic revenues (| crore) 10219.9 10828.7 10000.6 2.2 10322.5 -1.0 Miss on estimates was due to lower than estimated ASPDomestic margins (%) 1.5 3.2 5.7 -418 bps 3.6 -214 bps The miss on margins is attributable to high discounting & higher material costs

Domestic PAT (| crore) -1045.9 -507.7 -200.9 -420.7 -630.8 65.8 PAT came in below estimates due to lower than estimated margins

Source: Company, ICICIdirect.com Research Change in estimates

(| Crore) Old New % Change Old New % Change CommentsRevenue 289,535 275,754 -4.8 348,128 314,115 -9.8EBITDA 39,479 32,127 -18.6 55,575 43,289 -22.1EBITDA Margin (%) 13.6 11.7 -198 bps 16.0 13.8 -218 bps Operating margin estimates of JLR & standalone business reduced post Q3FY17

performance. The management has guided for ~14-15% EBITDA margins in the medium term as it will continue to face headwinds of forex hedges

PAT 12,060 6,507 -46.0 20,827 13,959 -33.0EPS (|) 35.5 19.2 -46.0 61.3 41.1 -32.9 EPS reduced due to the decline in revenue & margin estimate

FY17E FY18E

Source: Company, ICICIdirect.com Research Assumptions

CommentsUnits FY14 FY15E FY16E FY17E FY18EJaguar Land Rover 429,861 466,479 544,085 588,087 677,406 Almost maintained the volume estimatesJaguar 79,307 76,496 102,106 171,731 211,263Land Rover 350,554 389,983 441,979 416,356 466,143China JV N.A. 683 34,751 70,485 86,569Avg ASP/vehicle (£) 45,098.3 46,874.6 40,817.2 42,444.7 43,883.4RM/Unit (GBP) 27758 28265 24162 25135 26178Capitalised expenses (mn £) 1,030 1,158 1,242 1,495 1,675IndiaM&HCV 121,937 142,490 176,493 182,989 202,621LCV 299,252 222,272 204,741 218,942 254,465PV 145,428 137,574 130,478 152,838 182,944 New launches will spur growth

Source: Company, ICICIdirect.com Research


Company Analysis Revenues to remain upbeat as JLR grows! We expect consolidated revenues to grow at ~13.9% in FY18E to ~| 314115 crore driven by JLR’s revenue growth of ~19% in the same period at ~£29.7 billion. On the India side, we expect revenues to rise at 19.8% CAGR to ~| 54,334 crore by FY18E. Exhibit 1: We build revenue growth at 14% CAGR in FY18E

165,655188,818

232,861263,159 275,561 275,754

314,115

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FY12 FY13 FY14 FY15E FY16E FY17E FY18E


JLR product story to continue in coming years! The management has lowered its initial capex of £3.75 billion for FY17E. It is towards new products, technology & expansion of manufacturing capacity. The management expects capex to remain in the range of 15-17% of sales in the medium term on significant investments in platform development. Thus, we believe the roadmap for new product launches (Evoque 2016 MY, XJ 2016MY, new XF, F-PACE) and refreshes over the next four years looks clear. We expect the China JV to ramp up in FY18E. Exhibit 2: JLR volumes trend

21.5 19.6 17.8 19.1 20.1 21.2 21.7 27.0 32.2 34.6 43.6 48.5

95.6 95.6 86.2103.1 105.1 93.3 95.1

123.4130.2

99.895.6

103.8

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(000

's)

Jaguar LandRover



Exhibit 3: Jaguar market mix movement

Q3FY17

UK18%

N America27%

China21%

Europe21%

ROW13%

Q2FY16

UK36%

N America16%

China11%

Europe23%

ROW14%

Source: Company press release, ICICIdirect.com Research Retail sale volumes referred

Exhibit 4: Land Rover market mix movement

Q3FY17

UK15%

N America21%

China26%

Europe23%

ROW15%

Q3FY16

ROW20%

Europe20%

China20%

N America22%

UK18%

Source: Company press release, ICICIdirect.com Research Retail sale volumes referred

Exhibit 5: Product & geography mix

76.488.1

12.56.70.10.011.0 5.2

0

20

40

60

80

100

Q3FY16 Q3FY17

(%)

XF/XE XJ XK/F-Pace F-Type

5.3 0.1

35.537.3

0.0 0.0

14.6 14.1

25.0 26.6

19.7 21.9

0

20

40

60

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Q3FY16 Q3FY17

(%)

Defender Discovery Freelander Evoque Range Rover RRSport

Source: Company press release, ICICIdirect.com Research retail volumes referred RR ~ Range Rover


EBITDA margins to trend higher Tata Motors remains a unique case that in India has a combination of high leverage CV business along with a financial dragger on the PV side. On the other hand, on the global front with JLR, it has been one of the most profitable luxury carmakers in the world. The variation is mind boggling in itself with the number of levers towards EBITDA ranging from financial leverage to operating leverage to FX to product mix as well as market mix. Thus, in a nutshell, it remains a company that can have large variations from analyst estimates on a quarterly basis. The China JV reported a strong financial performance despite being in a ramp up phase. The China JV’s contribution towards FY16 PAT was £64 million. We expect JLR’s EBITDA margins to increase to 13.8% for FY18E. In the domestic business, we expect operational positivity to emerge (7.3% in FY18E).

Exhibit 7: Margins trend on standalone and JLR

9.9

8.1

6.5

4.0

7.3

4.8

-1.4-2.2

17.5 18.9

14.2

11.7

15.2

15.0

14.8 14.2

-4

-2

0

2

4

6

8

10

12

FY11 FY12 FY13 FY14 FY15E FY16E FY17E FY18E

(%)

0

2

4

6

8

10

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14

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18

20

(%)

EBITDA margins (Standalone) EBITDA margins (JLR)


Exhibit 6: Consolidated EBITDA margins to decline 26

,569 37

,368

42,1

14

41,8

51

43,2

89

32,1

27

14.1

16.0 16.015.2

13.811.7

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FY13 FY14 FY15E FY16E FY17E FY18E

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18

(%)



Return ratios to increase to reflect rising margins Return ratios witnessed a decline since FY12 primarily due to the significant investment in both JLR and domestic business, the latter of which failed badly in generating strong returns. Going ahead, we expect high JLR margins to positively impact return ratios. Return ratios in FY16E appear lower on account of the recent rights issue, which led to an equity dilution of ~5%. At the consolidated level, we expect PAT of | 13,959 crore in FY18E. Exhibit 8: Returns ratios trend

21.721.3

22.8

17.0

8.7

14.2

24.9

15.3

6.7

12.5

5

10

15

20

25

30

FY14 FY15E FY16E FY17E FY18E

(%)

RoCE RoE


Exhibit 9: Trend in net profit

9,86

1 13,9

44

13,9

86

12,6

38

6,50

7

13,9

59

0

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4000

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FY13 FY14 FY15E FY16E FY17E FY18E

(| c

rore

)

Source: Company press release, ICICIdirect.com Research


Outlook and valuation Tata Motors’ business has been increasingly skewed towards the global business of JLR. We believe that with JLR’s strong product line-up and planned product refreshes, the market share march is likely to continue. We remain positive on sustained earnings growth for the JLR business as the product pipeline grows and market share increases across geographies. We value the stock on an SOTP basis, with JLR on 3.8x EV/EBIDTA basis contributing ~| 444/share (excluding JV) while the domestic business contributes | 36/share. Inclusive of other subsidiaries, we arrive at a target price of | 535. Exhibit 10: Valuation on SOTP method

Parameters Basis Multiple Per ShareTata Motors Core business FY18E EPS 4 9 36JLR FY18E Adj EV/EBITDA 22,743 3.8 444China JV @50% stake FY18E EPS 6.5 10.0 33

Subsidiary valuation

Tata Daewoo FY18E EPS 0.4 8.0 3

Tata Motor Finance FY18E Adj BV 7.4 1.0 7

Tata Technologies FY18E EPS 1.4 10.0 14Value of investments 0.1x BV of unquoted invst 3

Value of subsidiaries, investments 29

Value post discount Holding co discount @ 20% 23Total value per share 535TML DVR inferred target value @ 30% discount 375


Exhibit 11: Valuation Revenues Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)FY15E 260,734 38.9 41.2 41.8 11.5 4.2 24.9 22.8 FY16E 272,646 4.6 37.2 (9.6) 12.7 3.9 15.3 17.0 FY17E 272,483 (0.1) 19.2 (48.5) 24.6 5.3 6.7 8.7 FY18E 310,180 13.8 41.1 114.5 11.5 3.8 12.5 14.2



Recommended History vs. consensus

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Jan-17Nov-16Aug-16Jun-16Mar-16Jan-16Nov-15Aug-15Jun-15Mar-15

(%)(|

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Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research Key events Date EventJan-08 Much touted "Nano" is unveiled at Auto Expo along with new 1 tonne LCV's "ACE". Jun-08 Acquisition of Jaguar & Land Rover for $2.3 billionJan-09 Tata Motors posts losses as domestic economy sales weaken and global foray causes dragJul-09 Tata Motors' Q1FY10 results rise 58% YoY beat estimates ,early signs of recovery of economy. Nano dispathces rise to 9,000 unitsMay-10 JLR turns profitable for Tata Motors with FY10 PAT of £32 million, big earnings beatDec-10 Nano sales fall 85% to 509 units on unavailability of vehicle financing options amid fire incidents Jun-11 JLR announces £1.5 billion capex spends, Tatat Motors CDS rises as European region problems flare upOct-11 JLR launches its path breaking mini-SUV "Evoque"Aug-12 Karl Slym becomes MD of Tata Motor's domestic businessJan-12 JLR reports highest rise in sales since June 2010 on the back of "Evoque"May-12 JLR reports tax credits to boost profit amid weaker than estiimated JLR marginsOct-12 Siam cuts India auto sales forecast second time in a yearAug-13 JLR reports stronger than estimated margins in Q1FY14 even as domestic business struggles in lossesFeb-14 JLR outlines timelines for new engine plant, new launches, China JV

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m)1 Tata Group of Companies 31-Dec-16 0.34 986.8 50.002 Ewart Investment, Ltd. 20-Sep-16 0.2698 779.0 778.973 Life Insurance Corporation of India 31-Dec-16 0.0518 149.4 -0.644 GIC Private Limited 31-Dec-16 0.0165 47.6 -0.035 ICICI Prudential Life Insurance Company Ltd. 31-Dec-16 0.0154 44.4 -0.726 BlackRock Institutional Trust Company, N.A. 31-Jan-17 0.014 40.4 0.987 Invest AD 31-Dec-16 0.0133 38.5 -1.498 The Vanguard Group, Inc. 31-Dec-16 0.0103 29.6 0.289 Dimensional Fund Advisors, L.P. 30-Nov-16 0.0089 25.6 0.0010 Norges Bank Investment Management (NBIM) 31-Dec-15 0.008 23.0 16.73

(in %) Mar-15 Jun-15 Sep-15 Dec-15 Mar-16Promoter 34.3 34.4 34.4 33.0 33.0FII 47.9 48.0 42.3 41.8 42.0DII 11.3 11.4 16.8 17.8 17.8Others 6.4 6.3 6.5 7.4 7.2

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesEwart Investment, Ltd. +6,260.8M +779.0M Reliance Nippon Life Asset Management Limited -42.2M -6.1MTata Group of Companies +347.3M +50.0M Capital Research Global Investors -17.8M -2.2MSBI Funds Management Pvt. Ltd. +18.2M +2.6M Invest AD -10.4M -1.5MFidelity Worldwide Investment (UK) Ltd. +12.4M +1.6M T. Rowe Price International (UK) Ltd. -8.2M -1.2MBlackRock Institutional Trust Company, N.A. +7.6M +1.0M Principal Global Investors (Equity) -5.3M -0.8M

Buys Sells

Source: Reuters, ICICIdirect.com Research


.

Financial summary Profit and loss statement | Crore

(Year-end March) FY15E FY16E FY17E FY18ETotal operating Income 263,159 275,561 275,754 314,115

Growth (%) 13.0 4.7 0.1 13.9Raw Material Expenses 159,920 162,419 163,652 185,521Employee Expenses 25,549 29,199 28,886 32,850Marketing Expenses 35,576 65,032 68,258 69,794Capitalised Expenses 0 -22,940 -17,168 -17,339Total Operating Expenditure 221,045 233,710 243,628 270,826EBITDA 42,114 41,851 32,127 43,289

Growth (%) 12.7 -0.6 -23.2 34.7Product development Expenses 2875 3480 3347 3633Depreciation 13389 17014 18349 19312Interest 4861 4624 4012 3826Other Income 899 982 866 1200PBT 21887 17715 7285 17719Minority Interest 87 106 30 0Total Tax 7643 2873 2933 4867PAT 13,986 12,638 6,507 13,959

Growth (%) 0.3 -9.6 -48.5 114.5EPS (|) 41.2 37.2 19.2 41.1


Cash flow statement | Crore (Year-end March) FY15E FY16E FY17E FY18EProfit after Tax 13,986.3 12,638.4 6,507.4 13,959.1

Add: Depreciation 13,389 17,014 18,349 19,312(Inc)/dec in Current Assets 1,015 -7,676 8,090 -5,415Inc/(dec) in CL and Provisions 4,472 12,465 -10,774 7,585Others 0 0 0 0CF from operating activities 32,862 34,441 22,174 35,441

(Inc)/dec in Investments -4,650 -5,129 -2,020 -2,020(Inc)/dec in Fixed Assets -28,436 -33,442 -36,500 -33,500Others 11,773 -1,226 330 500CF from investing activities (21,312) (39,797) (38,190) (35,020)

Issue/(Buy back) of Equity 0 35 0 0Inc/(dec) in loan funds 14,257 -6,112 -3,000 -3,000Dividend paid & dividend tax 0 -79 -396 0Inc/(dec) in Sec. premium 0 0 0 0Others -23,328 13,816 8,512 0CF from financing activities (9,071) 7,660 5,116 (3,000)

Net Cash flow 2,479 2,305 -10,900 -2,579Opening Cash 29,711 32,190 34,495 23,595Closing Cash 32,190 34,495 23,595 21,016


Balance sheet | Crore (Year-end March) FY15E FY16E FY17E FY18ELiabilities

Equity Capital 644 679 679 679Reserve and Surplus 55,618 81,993 96,617 110,576Total Shareholders funds 56,262 82,672 97,296 111,255Total Debt 69,211 63,100 60,100 57,100Deferred Tax Liability 1,343 3,166 3,166 3,166Long term provisions 15134 11817 12317 12817Minori ty Interest / Others 9,649 10,560 11,590 12,590Total Liabi li ties 151,600 171,315 184,469 196,928

AssetsGross Block 162,261 196,366 232,866 269,366Less: Acc Depreciation 83,101 100,778 119,127 141,439Net Block 79,160 95,588 113,738 127,926Capital WIP 33,263 33,263 33,263 33,263Total Fixed Assets 112,423 128,851 147,001 161,189Investments 15,337 20,466 22,486 24,506Inventory 29,272 33,399 29,309 35,276Debtors 12,580 12,990 12,691 13,597Loans and Advances 10,746 14,757 10,731 8,978Other Current Assets 2,948 2,075 2,400 2,695Cash 32,190 34,495 23,595 21,016Total Current Assets 87,736 97,717 78,726 81,562Creditors 57,407 63,633 59,722 66,285Provisions 6,036 8,702 8,167 8,601Total Current Liabilities 87,132 99,597 88,823 96,408Net Current Assets 604 -1,880 -10,097 -14,846Deferred Tax Asset 2,733 2,726 2,726 2,726Application of Funds 151,600 171,315 184,469 196,928


Key ratios (Year-end March) FY15E FY16E FY17E FY18EPer share data (|)

EPS 41.2 37.2 19.2 41.1Cash EPS 80.6 87.3 73.2 98.0BV 165.7 243.5 286.5 327.6DPS 0.0 0.2 1.0 0.0Cash Per Share 94.8 101.6 69.5 61.9Operating Ratios

EBITDA Margin (%) 16.2 15.4 11.8 14.0PBT / Net sales (%) 8.4 6.5 2.7 5.7PAT Margin (%) 2.8 7.6 8.2 5.2Inventory days 39.6 41.9 42.0 38.0Debtor days 17.6 17.4 17.0 16.0Creditor days 80.4 85.2 80.0 78.0Return Ratios (%)

RoE 24.9 15.3 6.7 12.5RoCE 22.8 17.0 8.7 14.2RoIC 39.9 29.4 12.9 20.1Valuation Ratios (x)

P/E 11.5 12.7 24.6 11.5EV / EBITDA 4.2 3.9 5.3 3.8EV / Net Sales 0.7 0.6 0.6 0.5Market Cap / Sales 0.6 0.6 0.6 0.5Price to Book Value 2.8 1.9 1.6 1.4Solvency Ratios

Debt/EBITDA 1.6 1.5 1.9 1.3Debt / Equity 1.2 0.8 0.6 0.5Current Ratio 1.0 1.0 0.9 0.8Quick Ratio 0.6 0.6 0.6 0.6



ICICIdirect.com coverage universe (Auto & Auto Ancillary) CMP M Cap(|) TP(|) Rating (| Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E

Amara Raja (AMARAJ) 849 930 Hold 14503 28.5 29.4 37.3 29.7 28.9 22.8 18.1 17.1 13.7 31.2 26.2 27.9 23.2 20.1 21.2Apollo Tyre (APOTYR) 181 225 Buy 9101 21.7 22.1 22.9 8.3 8.2 7.9 5.0 5.9 5.8 19.9 15.1 13.5 17.1 15.6 14.2Ashok Leyland (ASHLEY) 91 105 Buy 25806 2.5 5.9 6.7 36.0 15.5 13.7 10.8 8.3 6.9 23.0 27.4 28.2 13.1 24.8 23.2Bajaj Auto (BAAUTO) 2797 3000 Hold 80935 126.8 142.2 156.3 22.2 19.8 18.0 16.6 16.8 14.7 42.2 38.9 38.1 29.9 28.9 27.9Balkrishna Ind. (BALIND) 1180 1400 Buy 11409 58.7 77.0 83.8 20.1 15.3 14.1 11.2 9.6 7.6 20.4 22.5 24.7 20.3 22.5 24.7Bharat Forge (BHAFOR) 1067 1150 Buy 24851 28.0 30.5 44.6 38.1 35.0 23.9 17.6 17.9 13.4 16.5 14.8 19.5 18.3 17.4 21.5Bosch (MICO) 21859 25250 Buy 68636 410.2 567.0 566.2 55.2 40.0 40.0 36.0 37.5 26.1 15.1 15.8 15.8 22.5 21.4 25.3Eicher Motors (EICMOT) 24771 28970 Buy 66906 633.4 772.3 927.4 39.1 32.1 26.7 21.8 16.8 13.5 40.2 40.5 38.6 36.4 33.5 30.6Escorts (ESCORT) 422 405 Hold 5027 7.5 14.1 26.0 52.2 27.8 15.1 29.7 14.6 9.7 4.6 12.0 16.0 4.8 8.5 13.7Exide Industries (EXIIND) 212 240 Buy 18037 7.3 8.4 9.3 29.0 25.4 22.8 16.0 14.3 12.4 19.4 19.9 20.2 14.0 14.6 14.8Hero Mototcorp (HERHON) 3163 3330 Buy 63170 156.9 170.9 181.6 20.2 18.5 17.4 13.4 12.4 11.6 53.6 49.6 46.8 39.4 36.4 34.0JK Tyre & Ind (JKIND) 120 145 Buy 2716 21.0 15.5 22.5 5.7 7.7 5.3 4.5 4.9 4.3 20.1 14.5 15.9 29.1 19.3 20.7Mahindra CIE (MAHAUT) 204 225 Buy 6584 6.2 10.6 13.1 33.0 19.2 15.5 12.5 9.1 7.3 7.3 11.0 12.1 8.5 12.3 14.1Maruti Suzuki (MARUTI) 6056 6765 Buy 182997 151.3 260.7 307.5 40.0 23.2 19.7 19.8 15.9 13.0 22.7 25.1 24.9 16.9 23.6 22.8Motherson (MOTSUM) 348 370 Hold 48857 9.1 10.4 14.0 38.4 33.4 24.8 15.4 12.0 9.7 19.9 17.8 19.6 30.0 18.8 21.7Tata Motors (TELCO) 460 535 Buy 139403 37.2 19.2 41.1 12.3 23.9 11.1 3.8 5.1 3.8 17.0 8.7 14.2 15.3 6.7 12.5Wabco India (WABTVS) 5502 6350 Buy 10454 107.7 124.7 156.6 51.1 44.1 35.1 35.0 28.6 23.0 19.4 18.5 19.1 25.5 25.5 26.3

Sector / CompanyRoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)



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Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093

[email protected]


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