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Tata Motors' 3QFY15 Review: Roam Like A Jaguar

Tata Motors' (TTM) reported 3QFY15 results in which net profit fell below consensus mostly on the weakness in India and losses on FX hedging in the JLR business. Given that management avoided offering incentives in the US and diverted the units to Asia where JLR could command a higher ASP, JLR's EBITDA was better than expected. However, FY16 JLR EBITDA may be negatively affected on the gradual ramp in China and the UK, and higher costs associated with a new product launch. Nonetheless, I remain bullish on TTM as the only Indian OEM that is positioned for global growth along with its attractive JLR assets.

Highlights

Rationalized pricing accretive to JLR. JLR achieved an ASP growth of a modest 5% that was driven by a higher contribution from Range Rover and favorable product mix. Most importantly, management has been shifting its units from the US, where incentives are high, to… Read More …