CMP = Rs 743 (as of Friday)
Price target: Rs 1,075
Result highlights
- Tata Motors' Q4FY2007 results are slightly below our expectations, primarily on the margin front. The Q4FY2007 net sales (excluding the foreign exchange [forex] gain) of the company grew by 20.0% to Rs 8,206.8 crore, driven by a volume growth of 16.2% and a realisation growth of 3.3%.
- Excluding the effect of the forex gain/loss, the operating profit margin has fallen by 160 basis points year on year (yoy) and by 130 basis points sequentially to 11.0%.
- This was mainly on the back of a higher raw material cost and a sequential drop in the realisation due to a change in the product mix. Consequently, the operating profit grew by just 5.1% to Rs906 crore.
- The other income was higher at Rs60.4 crore against Rs4.4 crore last year. Further, lower interest cost and taxes, and stable depreciation aided the company to record a 25.9% growth in its profit to Rs576.7 crore.
- For the full year, the net revenues grew by 33% to Rs 27,404.8 crore against Rs 20,672 crore last year, while the net profit grew by 25% to Rs 1,913.5 crore.
- Looking at the consolidated results, the consolidated sales for the quarter grew by 24% to Rs 9,759.2 crore while the net profit grew by 31% to Rs682.3 crore.
- I maintain Buy call on this scrip with a target of Rs 1,075.
