Company Update

INDIA
AUTOMOBILES
22 August 2016

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

FY16 Annual Report highlights

Key highlights of TTMTs annual report are: (1) Consolidated shareholder
equity has risen 44%, comprising P&L (19%), rights issue (13%), forex, and
pension liability (11%). (2) A turnaround in the standalone business (revenue up
REPORT AUTHORS

16.7%) drove FY16 performance. (3) JLR invested GBP 3.1bn (14% of JLR
sales) in product development and manufacturing facilities. (4) A favourable
product launch cycle should boost JLR and standalone volumes in FY17,

Mihir Jhaveri
+91 22 6766 3459
mihir.jhaveri@religare.com

though Brexit and currency fluctuations pose key risks to JLR operations.
Consolidated equity up 44% YoY: Following a 14% decline in FY15 due to
unfavourable foreign exchange movement and higher pension liabilities,
consolidated equity increased 44% in FY16. The growth in equity came from higher
profit & loss accounts (19%), proceeds from the rights issue (13%), positive foreign
exchange movement, and a reduction in JLRs pension liabilities (11%).
Standalone business fuels growth: FY16 was a turnaround year for the standalone
business as MHCV volume growth (24%) led to net profits of Rs 4.3bn (vs. a
Rs 43bn loss in FY15); this drove TTMTs consolidated performance, offsetting the
470bps drop in JLRs EBITDA margin (14.2%) due to an adverse regional mix. EBITDAto-CFO conversion was healthy at 97% and FCF generation rose 82% to Rs 65bn.
JLR continues to invest heavily: JLR invested GBP 3.1bn in FY16 (14.1% of sales), of
which GBP 1.6bn was spent on product development and a similar sum on
manufacturing facilities. The company has outlined FY17 capex of GBP 3.75bn and
has announced plans to invest in a UK engine facility and a new plant in Slovakia
(GBP 1bn). Brexit and forex movements pose key risks to JLR operations and plans.
Strong launch cycle, maintain BUY: With a robust product slate planned for FY17,
we expect overall volumes to grow at a healthy rate over FY16-FY18. JLRs margins
are set to improve 140bps to 15.6% on strong volume growth. Maintain BUY on
TTMT with a Mar17 TP of Rs 530.

Siddharth Vora
+91 22 6766 3435
siddharth.vora@religare.com

PRICE CLOSE (19 Aug 16)

INR 510.00
MARKET CAP

INR 1,644.3 bln

USD 24.5 bln
SHARES O/S

3,323.1 mln
FREE FLOAT

67.0%
3M AVG DAILY VOLUME/VALUE

10.8 mln / USD 74.4 mln

52 WK HIGH

52 WK LOW

INR 522.60

INR 265.80

Financial Highlights
Y/E 31 Mar

FY14A

FY15A

FY16A

FY17E

FY18E

(INR)

2,328,337

2,631,590

2,755,611

3,280,939

3,825,078

630

EBITDA (INR mln)

374,186

421,138

402,367

476,791

575,089

530

Adjusted net profit (INR mln)

146,964

141,710

128,484

174,546

224,663

430

Revenue (INR mln)

Adjusted EPS (INR)

45.7

44.0

37.8

51.4

66.2

Adjusted EPS growth (%)

42.5

(3.6)

(14.1)

35.9

28.7

DPS (INR)

3.0

0.0

0.2

0.9

1.8

ROIC (%)

23.5

18.6

16.2

18.8

22.5

Adjusted ROAE (%)

28.5

23.3

18.8

19.5

20.7

Adjusted P/E (x)

11.2

11.6

13.5

9.9

7.7

EV/EBITDA (x)

5.2

4.5

4.9

3.9

3.0

P/BV (x)

2.5

2.9

2.1

1.8

1.4

Stock Price

Index Price
29,410
24,410

330
230
130

19,410
14,410

Source: Company, Bloomberg, RCML Research

This report has been prepared by Religare Capital Markets Limited or one of its affiliates. For analyst certification and other important disclosures, please refer to the Disclosure and Disclaimer section at the end of
this report. Analysts employed by non-US affiliates are not registered with FINRA regulation and may not be subject to FINRA/NYSE restrictions on communications with covered companies, public appearances, and
trading securities held by a research analyst account.

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Key highlights
Annual report excerpts
Topic

Comment

JLR on investments

Investing over-proportionally in technology, infrastructure and talent is critical to the future of the company and we
continue to do so.

FY17 JLR
investments

Investment spending in fiscal 2017 is expected to be in the region of GBP 3.75bn as we continue to invest in new
products and technology as well as capacity expansion to deliver profitable growth.

Vision

To achieve sustainable financial profitability in the next three years. We aim to be among the top 3 in global CVs and
domestic PVs and lastly, deliver exciting innovations.

Strategy

There is a well-defined roadmap to achieve these (strategies) with a deep focus on robust processes, cost efficiencies
and people management to enhance productivity and align business goals across the company

Standalone business

FY17 will mark a milestone year of growth, great launches and transformation. There continues to be the growing
pressure of competition and we will look to bring in significant launches in PVs and CVs with a focus on cost efficiencies
to remain competitive

MHCV growth

We expect this growth to sustain, especially with the planned infrastructure projects now getting into execution. Strong
GDP growth and consumer sentiment will also help sustain this momentum as will the upcoming regulatory changes.

LCV segment

With the versatile Ace platform and the improved macro-economic trends, we should also see improved growth there,
including the pick-up segment where we expect to bring in new products

Export Strategy

Global expansion will in fact be an important theme going forward as it offers economies of scale and returns on our R&D
investment, longer product cycles across markets and is the best de-risking strategy to reduce dependence on cyclical
markets.

Network

Tata Motors is expanding its network, both for passenger and commercial vehicles, as a part of its commitment to
increase its network three-fold in the next five years across the country

Shareholders equity up 44% post dip in FY15

TTMTs shareholder equity was hit by adverse foreign currency movement and interest
rate fluctuation on Jaguar Land Rover pension funds in FY15, while the contribution from
profit & loss accounts to equity almost equal over FY14-FY16. In FY15, shareholder equity
dipped 14% due to (1) losses of Rs 207bn from hedges and translation of accounts, and
(2) accumulated actuarial losses of Rs 28bn in the pension reserve as discount rates on
JLR pension funds declined from 4.6% to 3.4% (calculated based on discount rate set with
reference to corporate bond yields).
In FY16, foreign currency movement and interest rates (discount rate was increased to
3.6% from 3.4%) both moved favourably for TTMT, with gains from hedges and
translation totaling Rs 24bn while higher rates led to a reduction in actuarial losses by Rs
37bn. A rights issue during the year also led to a Rs 74bn increase in the security
premium account. In all, equity was up 44% which comprised: profit & loss accounts
(19%), rights issue (13%), foreign exchange and pension liabilities (11%).

Foreign currency movement and

interest rates both moved favourably
for TTMT in FY16

22 August 2016

Page 2 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Fig 1 - Movement in shareholders equity over FY15-FY16

(Rs bn)

FY15

FY16

Opening Shareholder Equity

656.0

562.6

Comments

Change in:
Equity Capital

0.4

1.3

74.0

139.6

143.6

General Reserve

0.5

(34.4)

Pension Reserve

(27.9)

37.0

(117.3)

(6.9)

Translation Reserve

(41.9)

17.3

FCMITDA

(48.0)

13.8

Security Premium Account

Profit and Loss

Hedging Reserve Account

Other Reserves
Closing Shareholder Equity

0.4

0.5

562.6

807.8

Rights issue
Transferred to Profit & Loss
Change in interest rate assumptions
Impact of foreign currency hedges and movement in translation
of assets in foreign currency

Source: RCML Research, Company, FCMITDA Foreign Currency Monetary Item Translation Difference Account

Standalone business turns around but JLR sputters

FY16 was a turnaround year for the standalone business as revenues grew 16.7%, helped
by MHCV volume growth of 24% which boosted realisations by 14.5% and lifted overall
volume growth out of negative territory to 1.9%. Solid revenue growth enabled the
standalone business to register a positive EBITDA margin of 6.5% and PAT of Rs 4.3bn
compared to a loss in FY15.

MHCV volume growth of 24% boosted

realisations and lifted overall volume
growth out of negative territory

For JLR, FY16 revenues grew at a tepid 1.6% in spite of healthy volume growth of 15.6%,
as realisations fell 12.2% due to an increased share of entry-level luxury models such as
Jaguar XE and Land Rover Discovery Sport in sales. JLRs EBITDA margin declined by
470bps to 14.2% owing to an adverse regional sales mix, with volumes being driven by
North America, Europe and the UK whereas higher-margin China sales fell 14.4%. Fall in
margins led to 36% decline in PAT to GBP 1,312mn for JLR.
Fig 2 - Operating metrics
Particulars

JLR ( mn)

Standalone (Rs mn)

Consolidated (Rs mn)

FY15

FY16

FY15

FY16

FY15

FY16

363,016

423,698

21,866

22,208

2,631,590

2,755,611

Growth (%)

5.9

16.7

12.8

1.6

13.0

4.7

Volume (%)

(12.2)

1.9

9.5

15.6

20.5

14.5

3.0

(12.2)

(8,000)

27,402

4,132

3,147

421,138

402,367

Sales

Realisation (%)
EBITDA
EBITDA Margin (%)
PAT
Growth (% YoY)

(2.2)

6.5

18.9

14.2

16.0

14.6

(43,352)

4,335

2,038

1,312

141,710

128,484

8.5

(35.6)

(3.6)

(9.3)

Source: RCML Research, Company

While FY16 was a muted year for sales in China primarily due to weak economic
conditions in H1FY16, JLRs performance improved encouragingly in H2. Volumes of the
China JV grew 55% over Q3FY16-Q1FY17 and profits stood at GBP 64mn in FY16. The
contribution of China to overall sales has improved to 19.4% in FY17 YTD and volumes
from the China JV have grown 170% in the same period.

FY16 a muted year for Chinese sales

but volumes ramping up

22 August 2016

Page 3 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Fig 3 - Contribution of China to sales dropped to 18.6% in

FY16 hitting overall profitability
(%)

UK

North America

Europe

China

(Units)

All Other Markets

22.0

21.7

22.1

20.2

17.8

16.4

18.6

19.4

17.0

20.6

23.7

25.1

23.9

25.0

19.8

10,000

30

21.6

19.1

19.0

19.0

16.8

17.4

17.0

19.1

19.5
YTD-FY17

6,000
4,000

20
10

9,010

8,000

22.4

40

12,367

12,000

60
50

14,039

14,000

80
70

Volumes

16,000

100
90

Fig 4 - China JV is ramping up at a strong pace

19.6

19.3

17.7

18.8

20.6

FY12

FY13

FY14

FY15

FY16

2,000

Source: RCML Research, Company

0
Q3FY16

Q1FY17

Q4FY16

Source: RCML Research, Company

Cash generation healthy

The consolidated EBITDA-to-CFO conversion rate has improved to 97% in FY16 from 84%
in FY15 both standalone operations and JLR recorded strong cash conversion ratios,
which helped reduce consolidated debt levels by Rs 31.4bn despite high capital
expenditure. Free cash flow to firm (FCF) was up 82% to Rs 65bn in FY16.

Strong cash conversion helped reduce

consolidated debt by Rs 31.4bn

Fig 5 - Healthy cash generation leads to reduction in debt

Particulars
EBITDA

JLR ( mn)

Standalone (Rs mn)

Consolidated (Rs mn)

FY15

FY16

FY15

FY16

FY15

FY16

(8,000)

27,402

4132

3147

421,138

402,367

(22,143)

23,462

3627

3560

355,313

391,667

86

88

113

84

97

Capex

(30,793)

(30,042)

(2,767)

(2,817)

(319,622)

(326,821)

FCF

(52,936)

(6,580)

860

743

35,691

64,846

60,816

(52,472)

527

(48)

129,681

(31,419)

CFO
EBITDA to CFO conversion (%)

Change in Debt
Source: RCML Research, Company

Investment in JLR products and facilities continues

JLR has continued to invest heavily in product development, technology and
manufacturing facilities. A total of GBP 3.1bn was spent in FY16, of which GBP 1.6bn was
towards product development and technology-related R&D expenses while a similar sum
was spent on tangible assets including manufacturing facilities. The total investments
amounted to 14.1% of JLR sales, of which GBP 2.8bn was capitalised and
GBP 318mn booked as expenses during the year.

JLR spent 14% of sales on product

development, technology and
manufacturing facilities

Further, JLR has already announced plans to spend GBP 450mn to double capacity at its
engine manufacturing centre at Wolverhampton (UK), bringing the total investment at
this plant to GBP 1bn. The company also plans to invest GBP 1bn to build a
manufacturing plant in Slovakia with an annual capacity of 150,000 units. Lastly, it has
commenced production at Rio de Janeiro in Brazil in Jun16 which has an annual capacity
of 24,000 units. JLR expects to incur capex of GBP 3.75bn in FY17.

22 August 2016

Page 4 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Fig 6 - Investments in product and facilities remain high at 14.1% of sales

CFO

( mn)

Product & other investment

4,000
13.4

3,500

Investment as % of revenue (R)

14.4

13.9

(%)
16

14.1

14

11.5
3,000

12

2,500

10

2,000

1,500

1,000

500

2
2,500 1,560

2,429 2,118

3,422 2,684

3,627 3,147

3,560 3,135

FY12

FY13

FY14

FY15

FY16

Source: RCML Research, Company

Fig 7 - Manufacturing facilities

Capacity
(units)

Plants

Models manufactured

Halewood, UK

RR Evoque, Discovery Sport

280,000

Castle Bromwich,UK

XJ, XF, XF - Sportbrake, F-Type

200,000

Solihull, UK

Range Rover, Range Rover Sport, Discovery,

Defender, XE, F-Pace

120,000

Changshu China

RR Evoque, Discovery Sport

130,000

Pune, India (assembly)

RR Evoque, Discovery Sport, XF, XE, XJ

Total

Plans to invest GBP 1bn to build a

manufacturing plant in Slovakia with
an annual capacity of 150,000 units

730,000

Upcoming expansion
Rio de Janeiro, Brazil (Q1FY17)

RR Evoque, Discovery Sport

Nitra, Slovakia (FY18)

Graz, Austria

Manufacturing partnership with Magna Steyr UK

Total

24,000
150,000
904,000

Source: RCML Research, Company

Along with manufacturing capacity, JLR has also focused on expanding its global sales and
distribution network. As of FY16, this network comprised 20 National Sales Companies
(NSC), 74 importers, 33 export partners and 2,720 franchise sales dealers, of which 1,026
are joint Jaguar and Land Rover dealers.

JLR volumes to grow on product launches and refreshes

FY16 saw the launch of 13 new models, refreshes and variants these included 3 new
models in the JLR range: Jaguar XE, F-Pace and Land Rover Discovery Sport, an all-new
model of the Jaguar XF and a refresh of the XJ. Following these launches, the company
has discontinued production of Defender, Freelander and Jaguar XK. For FY17, JLR plans
to launch the Evoque Convertible, long wheelbase Jaguar XF L and refreshed Jaguar XJ.

13 new models, refreshes and variants

rolled out in FY16

22 August 2016

Page 5 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Fig 8 - Performance of JLR models over FY16

Wholesale sales (units)

FY15

FY16

Comments

XE

39,247

Launched in May15, will start sales in North America in May16

XF

45,921

36,197

All new XF introduced in Sep15

XJ

16,332

12,230

XJ refresh launched in Dec15

F TYPE

12,165

12,563

Jaguar Models

F-PACE

1,722

2,078

147

76,496

102,106

Defender

20,036

20,209

Freelander

38,729

1,385

Discovery Sport

13,618

102,826

Discovery

50,601

53,741

Range Rover Sport

85,762

90,267

119,819

113,428

XK
Total Jaguar

F-Pace retail sales to start in FY17

Discontinued

Land Rover Models

Range Rover Evoque

Range Rover
Total Land Rover

61,418

60,123

389,983

441,979

Discover Sport caters to entry segment; Defender and Freelander

discontinued

Evoque Convertible to be launched in FY17, Evoque refreshed in FY16

Source: RCML Research, Company

Brexit and currency fluctuations pose key risks to JLR

TTMT has explicitly highlighted two key risks in the annual report, which may adversely
affect the companys operations and financials (1) Brexit and (2) Exchange rates.
Annual report extracts

Annual report highlights risk of Brexit

on JLR export volumes

The United Kingdoms exit from the European Union (EU) may adversely impact our
business, results of operations and financial condition. If the outcome of the
referendum eventually results in the exit of the United Kingdom from the European
Union (Brexit), a process of negotiation would determine the future terms of the
United Kingdoms relationship with the European Union. Depending on the terms of
Brexit, if any, the United Kingdom could lose its present rights or terms of access to the
single EU market and to the global trade deals negotiated by the European Union on
behalf of its members. New or modified trading arrangements between the United
Kingdom and other countries may have a material adverse effect on the export volumes
of our Jaguar Land Rover business.
Exchange rate and interest rate fluctuations could materially and adversely affect the
companys financial condition and results of operations. The company imports capital
equipment, raw materials and components from, manufactures vehicles in, and sells
vehicles in various countries, and therefore the companys revenues and costs have
significant exposure to the relative movements of the GBP, the US dollar, the Euro, the
Russian Ruble, the Chinese Renminbi, the Japanese Yen and the Indian rupee.
Moreover, the company has outstanding foreign currency denominated debt and is
sensitive to fluctuations in foreign currency exchange rates. The company has
experienced and expects to continue to experience foreign exchange losses and gains on
obligations denominated in foreign currencies, in respect of borrowings and foreign
currency assets and liabilities, due to currency fluctuations.

22 August 2016

Page 6 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Currency fluctuation impact on cash flow hedges

JLR has stated in its annual report that a 10% depreciation/appreciation of the foreign
currency underlying its cash flow hedges would have resulted in an approximate
additional loss/gain of GBP 1.8bn/GBP 1.7bn in equity and a gain/loss of GBP 60mn/
GBP 54mn in the consolidated income statement for FY16.
Currency fluctuation impact on balance sheets hedges
Similarly, a 10% appreciation/depreciation of the US Dollar, Chinese Yuan and Euro
would have resulted in an increase/decrease in the groups net profit before tax and total
equity by ~GBP 170mn, GBP 10mn and GBP 105mn respectively for FY16.
Post-Brexit in Jun16, the GBP has depreciated sharply against other major currencies
this increases the possibility of higher hedging losses in the coming quarters, in line with
the impact analysis of currency fluctuations stated above.
Fig 9 - GBP depreciated 4% and 9% against the USD and
EUR respectively in FY16
GBP/USD

(GBP/USD)

GBP/EUR (R)

Fig 10 - ...and has further depreciated 10% and 9% in FY17

YTD

0.80

(GBP/EUR)
0.95

0.75

0.90
0.85

0.70

GBP/USD

(GBP/USD)

GBP/EUR (R)

(GBP/EUR)

0.80

0.95

0.75

0.90
0.85

0.70

0.80

0.80
0.65

0.65

0.75

0.75

Aug-16

Jul-16

Jul-16

Jul-16

Jun-16

Jun-16

Jun-16

May-16

May-16

May-16

May-16

Apr-16

0.65
Apr-16

0.55
Apr-16

0.70

Apr-16

Oct-15

Oct-14

Apr-15

Apr-14

Oct-13

Apr-13

Oct-12

Oct-11

Apr-12

Apr-11

Oct-10

0.65

Apr-10

0.55

Oct-09

0.70

Apr-09

0.60

0.60

Source: RCML Research, Company

Source: RCML Research, Company

Fig 11 - INR depreciation against GBP stood at 1.4% vs.

6.5%/10% against USD/EUR

Fig 12 - For FY17 YTD, INR has appreciated by 8% vs. GBP

and been flattish against USD and EUR

(Rs)

INR/USD

INR/EUR

(Rs)

INR/GBP

110

INR/USD

INR/EUR

INR/GBP

100

100

95

90

90

80

85
80

70

75
60

Source: RCML Research, Company

Aug-16

Jul-16

Jul-16

Jul-16

Jun-16

Jun-16

Jun-16

May-16

May-16

May-16

May-16

Apr-16

Apr-16

Apr-16

Oct-15

Apr-15

Oct-14

Apr-14

Oct-13

Apr-13

Oct-12

Apr-12

Oct-11

Apr-11

Oct-10

Apr-10

Oct-09

60

Apr-09

65

40

Apr-16

70

50

Source: RCML Research, Company

22 August 2016

Page 7 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Standalone business entering favourable product launch cycle

TTMTs standalone business returned to profitability in FY16 on the back of strong
growth in MHCV volumes. The recently launched Prima, Ultra and Signa platforms of
MHCVs are expected to boost volumes in FY17 as well. TTMT expects the LCV
category to benefit from greater proliferation of the hub-n-spoke logistics model and
GST implementation.
In the passenger vehicle segment, TTMT expects FY17 to be a transformational year with
a slew of new launches planned. With an entirely new Impact Design concept for car
design, the first launch of Tiago has been well received in the market and the company
already has a healthy order book. As showcased at the Auto Expo 2016, TTMT plans to
launch the Hexa (premium SUV), Kite-5 (compact sedan based on Tiago) and Nexon
(compact SUV) in FY17, which are expected to drive PV segment volumes in FY17.

TTMT expects FY17 to be a

transformational year in the PV
segment backed by new launches

Fig 13 - Segment-wise volume performance

(units)

FY13

FY14

FY15

FY16

MHCV

143,381

110,187

127,011

156,961

(30.7)

(23.2)

15.3

23.6

396,743

271,225

191,890

170,181

22.8

(31.6)

(29.3)

(11.3)

229,131

140,287

133,320

126,534

Growth (% YoY)
LCV
Growth (% YoY)
PVs
Growth (% YoY)
Exports
Growth (% YoY)
Total
Growth (% YoY)

(30.7)

(38.8)

(5.0)

(5.1)

50,831

49,892

49,917

58,036

(19.4)

(1.8)

0.1

16.3

820,086

571,591

502,138

511,712

(11.2)

(30.3)

(12.2)

1.9

Source: RCML Research, Company

22 August 2016

Page 8 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Per Share Data

Y/E 31 Mar (INR)

FY14A

FY15A

FY16A

FY17E

FY18E

Reported EPS

43.5

43.5

32.5

51.4

66.2

Adjusted EPS

45.7

44.0

37.8

51.4

66.2

3.0

0.0

0.2

0.9

1.8

203.9

174.8

237.9

288.2

352.2

DPS
BVPS

Valuation Ratios
Y/E 31 Mar (x)

FY14A

FY15A

FY16A

FY17E

FY18E

EV/Sales

0.8

0.7

0.7

0.6

0.4

EV/EBITDA

5.2

4.5

4.9

3.9

3.0

Adjusted P/E

11.2

11.6

13.5

9.9

7.7

2.5

2.9

2.1

1.8

1.4

FY14A

FY15A

FY16A

FY17E

FY18E

EBITDA margin

16.1

16.0

14.6

14.5

15.0

EBIT margin

10.2

9.8

7.2

7.9

8.4

6.3

5.4

4.7

5.3

5.9

Adjusted ROAE

28.5

23.3

18.8

19.5

20.7

ROCE

16.6

13.1

11.5

12.8

14.3

Revenue

23.3

13.0

4.7

19.1

16.6

EBITDA

40.8

12.5

(4.5)

18.5

20.6

Adjusted EPS

42.5

(3.6)

(14.1)

35.9

28.7

Invested capital

37.3

3.5

18.2

(0.1)

8.5

Receivables (days)

17

17

17

12

12

Inventory (days)

61

65

70

55

46

Payables (days)

95

95

94

94

98

Current ratio (x)

1.0

0.9

0.9

0.9

1.0

Quick ratio (x)

0.3

0.3

0.3

0.4

0.4

Gross asset turnover

2.0

1.8

1.6

1.6

1.5

Total asset turnover

1.2

1.2

1.1

1.2

1.2

Net interest coverage ratio

5.0

5.3

4.3

6.2

7.7

Adjusted debt/equity

0.5

0.7

0.5

0.2

0.1

P/BV

Financial Ratios
Y/E 31 Mar
Profitability & Return Ratios (%)

Adjusted profit margin

YoY Growth (%)

Working Capital & Liquidity Ratios

Turnover & Leverage Ratios (x)

DuPont Analysis
Y/E 31 Mar (%)

FY14A

FY15A

FY16A

FY17E

FY18E

Tax burden (Net income/PBT)

74.0

64.7

79.8

78.1

79.0

Interest burden (PBT/EBIT)

83.6

84.7

81.6

85.8

88.5

EBIT margin (EBIT/Revenue)

10.2

9.8

7.2

7.9

8.4

Asset turnover (Revenue/Avg TA)

120.5

115.5

109.5

116.1

120.7

Leverage (Avg TA/Avg equities)

374.2

374.0

367.4

316.5

291.5

28.5

23.3

18.8

19.5

20.7

Adjusted ROAE

22 August 2016

Page 9 of 13

BUY

Tata Motors

TP: INR 530.00

3.9%

TTMT IN

Company Update
INDIA
AUTOMOBILES

Income Statement
Y/E 31 Mar (INR mln)

FY14A

FY15A

FY16A

FY17E

FY18E

2,328,337

2,631,590

2,755,611

3,280,939

3,825,078

EBITDA

374,186

421,138

402,367

476,791

575,089

EBIT

237,752

258,500

197,421

260,474

321,148

Net interest income/(expenses)

(47,338)

(48,615)

(46,234)

(41,887)

(41,600)

8,286

8,987

9,817

4,881

4,667

EBT

198,700

218,873

161,004

223,468

284,215

Income taxes

(58,529)

Total revenue

Other income/(expenses)
Exceptional items

(47,648)

(76,429)

(28,726)

(47,992)

Extraordinary items

(9,854)

(1,847)

(21,196)

Min. int./Inc. from associates

(1,132)

(734)

(845)

(930)

(1,023)

140,067

139,863

110,238

174,546

224,663

6,898

1,847

18,246

146,964

141,710

128,484

174,546

224,663

Reported net profit

Adjustments
Adjusted net profit

Balance Sheet
Y/E 31 Mar (INR mln)

FY14A

FY15A

FY16A

FY17E

FY18E

Accounts payables

573,157

574,073

636,329

805,021

938,643

Other current liabilities

116,861

192,897

198,933

208,879

219,323

Provisions

201,610

211,703

205,194

195,887

196,887

Debt funds

606,423

736,104

704,685

694,685

684,685

25,969

91,419

99,465

99,465

99,465

6,438

6,438

6,792

6,792

6,792

649,597

556,181

801,035

971,914

1,189,241

Other liabilities
Equity capital
Reserves & surplus
Shareholders' fund

656,035

562,619

807,827

978,705

1,196,033

2,184,260

2,373,148

2,661,315

2,992,690

3,346,364

Cash and cash eq.

297,118

321,158

328,800

492,106

608,033

Accounts receivables

105,742

125,792

129,900

107,866

125,756

Inventories

272,709

292,723

333,990

275,692

321,453

Other current assets

319,850

286,432

307,741

348,851

403,265

Investments

106,867

153,367

204,661

205,016

205,390

Net fixed assets

641,128

837,825

1,015,902

1,222,336

1,341,145

CWIP

332,626

286,401

272,604

272,604

272,604

49,788

46,970

48,365

48,365

48,365

7,748

13,900

(4,397)

(3,897)

(3,397)

Total liabilities and equities

Intangible assets
Deferred tax assets, net
Other assets

50,685

8,580

23,749

23,749

23,749

Total assets

2,184,260

2,373,148

2,661,315

2,992,690

3,346,364

Cash Flow Statement

Y/E 31 Mar (INR mln)

FY14A

FY15A

FY16A

FY17E

FY18E

276,501

302,501

315,184

390,863

478,603

61,706

63,070

57,039

41,887

41,600

Changes in working capital

57,744

(36,718)

25,515

208,552

27,001

Other operating cash flows

(34,439)

26,460

(6,071)

1,359

1,545

Cash flow from operations

361,512

355,313

391,667

642,662

548,750

Net income + Depreciation

Interest expenses
Non-cash adjustments

Capital expenditures

(269,751)

(319,622)

(326,821)

(422,750)

(372,750)

Change in investments

(5,596)

(35,959)

(65,731)

(355)

(373)

Other investing cash flows

36,798

(27,707)

40,457

(695)

(764)

Cash flow from investing

(238,550)

(383,287)

(352,095)

(423,800)

(373,888)

Equities issued

78,617

Debt raised/repaid

41,173

130,302

(51,740)

(10,000)

(10,000)

Interest expenses

(61,706)

(63,070)

(57,039)

(41,887)

(41,600)

(7,220)

(7,204)

(1,739)

(3,668)

(7,335)

Other financing cash flows

(11,081)

(8,015)

(27)

Cash flow from financing

(38,832)

52,014

(31,930)

(55,555)

(58,935)

Dividends paid

Changes in cash and cash eq

Closing cash and cash eq

84,130

24,040

7,642

163,306

115,927

297,118

321,158

328,800

492,106

608,033

22 August 2016

Page 10 of 13

RESEARCH TEAM

ANALYST

SECTOR

EMAIL

TELEPHONE

Varun Lohchab
(Head India Research)

Consumer, Strategy

varun.lohchab@religare.com

+91 22 6766 3470

Mihir Jhaveri

Auto, Auto Ancillaries, Cement

mihir.jhaveri@religare.com

+91 22 6766 3459

Siddharth Vora

Auto, Auto Ancillaries, Cement

siddharth.vora@religare.com

+91 22 6766 3435

Misal Singh

Capital Goods, Infrastructure, Utilities

misal.singh@religare.com

+91 22 6766 3466

Prashant Tiwari, CFA

Capital Goods, Infrastructure, Utilities

prashant.tiwari@religare.com

+91 22 6766 3485

Manish Poddar

Consumer

manish.poddar@religare.com

+91 22 6766 3468

Rohit Ahuja

Energy

ahuja.rohit@religare.com

+91 22 6766 3437

Akshay Mane

Energy

akshay.mane@religare.com

+91 22 6766 3438

Parag Jariwala, CFA

Financials

parag.jariwala@religare.com

+91 22 6766 3442

Vikesh Mehta

Financials

vikesh.mehta@religare.com

+91 22 6766 3474

Rumit Dugar

IT, Telecom, Media

rumit.dugar@religare.com

+91 22 6766 3444

Saumya Shrivastava

IT, Telecom, Media

saumya.shrivastava@religare.com

+91 22 6766 3445

Pritesh Jani

Metals

pritesh.jani@religare.com

+91 22 6766 3467

Arun Baid

Mid-caps

arun.baid@religare.com

+91 22 6766 3446

Praful Bohra

Pharmaceuticals

praful.bohra@religare.com

+91 22 6766 3463

Aarti Rao

Pharmaceuticals

aarti.rao@religare.com

+91 22 6766 3436

Jay Shankar

Economics & Strategy

shankar.jay@religare.com

+91 11 3912 5109

Rahul Agrawal

Economics & Strategy

ag.rahul@religare.com

+91 22 6766 3433

22 August 2016

Page 11 of 13

RESEARCH DISCLAIMER

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22 August 2016

Page 12 of 13

RESEARCH DISCLAIMER

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Digitally signed by JHAVERI MIHIR

PANKAJ
Date: 2016.08.22 14:00:33 +05'30'

22 August 2016

Page 13 of 13