Motilal Oswal’s research report on Tata Motors
JLR hosted its Investors Day to share its updated strategy ‘Reimagine’ to drive sustainable recovery and make business fit for future (click here for the presentation). JLR’s ‘Reimagine’ strategy is not about catching up but taking a leap and right sizing, reorganizing and repurposing the organization. It plans to launch 6 Land Rover models in pure EV form in next 5 years with first launch in FY24. It is targeting >10% EBIT margins driven by ‘Refocus’ program (3pp by FY24) and architecture consolidation (>3% by FY26). This coupled with controlled capex at GBP2.5b p.a for next 3 years, it expects substantial reduction in net debt and FCF increase from FY23 (net debt zero by FY24).
We are upgrading our consol. EPS estimates by 15%/9% for FY22/23, as we factor in for the restructuring/reorganization cost of GBP1.5b in 4QFY21 (and impact of GBP0.5b on cashflows in FY22) and its subsequent benefit on lower depreciation and amortization. Maintain Buy with a TP of INR400/share (Mar’23E SOTP).