JLR Performs Again, Drives Tata Motors’ Numbers

After a robust Q3 performance by Tata Motors, the company's overseas subsidiary Jaguar Land Rover (JLR) and domestic operation showed another set of good numbers for February 2014. Though the performance of JLR in January this year was good, the domestic operations were facing problems during the same period.

The overall sales for Jaguar grew by 15.34% to 5300 units in February 2014 against 4595 units in the same period last year. However, only XF model showed a positive growth of 17.24% during the same period on a yearly basis. Its XJ and XK models showed negative growth of 13.52% and 43.08% respectively on a yearly basis. The considerable growth in XF model was the major trigger for its overall sales growth during the said month. Its recently launched F-Type model also chipped in, with 574 units in sales.

The Land Rover has also showed a good growth of 13.15% in its overall sales on yearly basis and sold 25187 units during February 2014 against 22260 units during the same month last year. The company's Freelander model showed a good 11.54% growth for the said month on a yearly basis. Similar to Jaguar, the strong performance by single model – Freelander helped the company to post considerable positive overall growth during the month. Its Discovery and Range Rover Evoque models showed a marginal yearly growth during the same period. The rest of the models sales during February2014 were down compared to the same month last year.

The combined JLR sales figure was up by 13.52% during February 2014 on yearly basis. On region wise, JLR showed subdued performance in its traditional markets – UK and Europe. The UK sales were down by 24.90% and Europe sales were marginal up by 0.84% during February2014 on yearly basis. However, JLR's other markets across the globe showed considerable traction in sales units during the said month. China market continued to lead the JLR sales growth with 43.70% yearly growth in the reported month. Rest of the World, Asia Pacific and North America markets grew by 16.44, 15.68 and 11.86% respectively on yearly basis during February2014.

On domestic operations front, Tata Motors showed disappointing performance in both production and sales front. The domestic production was down by 29.53% during February2014 against the same period last year. Major disappointment was its 39.11% contraction in its sales, much higher than production contraction. Only the cars segment sales showed 16.18 % yearly growth during the same period. The rest all segments were down considerably. Interestingly, the domestic operations showed a handsome yearly growth of 16.02% during the said period. All segments except cars showed positive growth in their exports during February 2014. The MHCV segment showed a robust 77.94 % yearly growth for its export. The strong growth in this segment encouraged the company to increase its production by 22.75% during the same month.

At present, the stock of Tata Motors is trading at Rs 393, with a TTM price-to-earnings ratio of 9.03x. Considering the consistent strong performance by JLR and early signs of revival in exports of the domestic operations, investors may think of investing in this stock.