TATA MOTORS
Reco price/date: Rs 305/March 13;
Current/target price: Rs 300.95/Rs 340
We believe JLR's market share is likely to inch up, driven by (1) ramp-up in capacity of Evoque (mini UV segment is the fastest-growing luxury car segment); demand is outstripping supply for Evoque in our view, (2) launch of China plant in FY15, which will help the company reduce the price to the extent of at least 25 per cent for Jaguar and Land Rover for lower-priced models and benefit from pent-up demand of middle-income households in China and (3) success of new launches like Range Rover, Range Rover Sports and small Jaguar, likely to carve their own niches. We continue to prefer Tata Motors in the auto space due to strong growth outlook for JLR. Domestic automobile demand in India is likely to remain subdued in FY14, while stocks are factoring in a fair bit of recovery in volumes. We see downside risks to consensus earnings estimates for most auto stocks except for Tata Motors, as we believe volume growth will disappoint. Coverage view: NEUTRAL.
BHARTI AIRTEL
Reco price/date: Rs 307/March 11;
Current/target price: Rs 315/Rs 310
We met Bharti management and various domestic investors in India last week. There are many different views on competition, license auctions, Africa, RIL launch and data outlook. Again, expectations are high but confidence has taken a beating after two years of disappointing results. This should turn some time, but Bharti is a complex business to model and analyse, so volatility will likely persist. This might present trading opportunities into the results (including good Q4FY13 results) and 'newsflow' will likely continue to be a key share price driver. Fundamentally, we don't think the stock is inexpensive, hence Neutral.
Reco price/date: Rs 305/March 13;
Current/target price: Rs 300.95/Rs 340
We believe JLR's market share is likely to inch up, driven by (1) ramp-up in capacity of Evoque (mini UV segment is the fastest-growing luxury car segment); demand is outstripping supply for Evoque in our view, (2) launch of China plant in FY15, which will help the company reduce the price to the extent of at least 25 per cent for Jaguar and Land Rover for lower-priced models and benefit from pent-up demand of middle-income households in China and (3) success of new launches like Range Rover, Range Rover Sports and small Jaguar, likely to carve their own niches. We continue to prefer Tata Motors in the auto space due to strong growth outlook for JLR. Domestic automobile demand in India is likely to remain subdued in FY14, while stocks are factoring in a fair bit of recovery in volumes. We see downside risks to consensus earnings estimates for most auto stocks except for Tata Motors, as we believe volume growth will disappoint. Coverage view: NEUTRAL.
-KOTAK Institutional Equities
BHARTI AIRTEL
Reco price/date: Rs 307/March 11;
Current/target price: Rs 315/Rs 310
We met Bharti management and various domestic investors in India last week. There are many different views on competition, license auctions, Africa, RIL launch and data outlook. Again, expectations are high but confidence has taken a beating after two years of disappointing results. This should turn some time, but Bharti is a complex business to model and analyse, so volatility will likely persist. This might present trading opportunities into the results (including good Q4FY13 results) and 'newsflow' will likely continue to be a key share price driver. Fundamentally, we don't think the stock is inexpensive, hence Neutral.
-Nomura Equity Research