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With company being a play on Global economic recovery, the improving macros in China and US have led the analysts at Deutsche BAnk to upgrade their target price to Rs 400 for the stock trading at Rs 353 levels.
This has been in the back of 14.3% and 11.2% increases in FY15 and FY16 Earnings Estimates respectively and a 25% increase in valuation, in line with the expansion in valuation multiples for automotive peers reflecting the improvement in global macro.
China and the US, which account for 45% of Jaguar LandRover’s (JLR) volumes, have been particularly robust. For JLR, this has echoed in falling incentives, volume momentum and robust margins.
The company being a global play now derives 85% of its EBITDA (earnings before Interest Tax depreciation and Amortisation) from JLR while India contributes just 15% to company’s consolidated EBIDTA.
The analysts see 15% CAGR growth in revenues and EBIDTA for JLR in FY13-16 period. They peg FY14E/FY15E/FY16E EBITDA at £ 3.0bn/£3.5bn/£ 3.8bn, respectively.
For India they expect cyclical recovery in commercial vehicles to begin in FY15E. They see 8% CAGR growth in Revenues and 40% CAGR growth in EBIDTA over three-year (FY13-16). FY14E/FY15E/FY16E EBITDA is pegged at Rs 1,300 crore/Rs 2,600 crore/Rs 4,600 crore, respectively.
