Goldman Sachs has upgraded
Tata Motors from neutral to BUY.
Reasons for the upgrade
JLR’s product portfolio is in early life cycle, and should sustain strong upgrades - we see 25% FY11-FY14E revenue CAGR, driving 20%-30% op./free cash flow CAGR - our FY13E EPS is 15% above Bloomberg consensus.
Global sector growth is slowing, but we see luxury cars outperforming the wider passenger car market. Tata Motors is at a 20% discount to peers on cash flow metrics implying major FY13E-FY14E volume/cash margin decline, which we think is unlikely.
It has also raised FY12E-FY14E EPS by 13%-28%, on higher sales and margin estimates. Goldman has set a target of Rs 332 in 12 Months for Tata Motors.
Tata Motors DVR is currently trading at 45% discount.
