CJLR wholesales grow 15%, reflecting robust recovery. Jaguar Land Rover’s (JLR’s) wholesale volumes declined 44.8% y-o-y to ~65.4k units (v/s est., ~49k) in 1QFY21, whereas volumes for the China JV grew ~15% y-o-y at ~16.5k units. Jaguar volumes fell ~54% y-o-y to ~18k units (our estimate, 15.6k), whereas Land Rover (LR) volumes contracted ~40% y-o-y to ~47.5k units (our estimate: 33.4k).
JLR’s 1QFY21 retail sales declined ~42% y-o-y to ~74k, with LR decreasing ~38% and Jaguar ~52.5%. June retail sales fell ~25% y-o-y to 35.3k. This was the first month of retail for many markets, such as the UK. In June, China (-7.4% y-o-y) and North America (+2.2% y-o-y) were particularly encouraging. UK sales were down 31.8%, EU sales 52.5%, and RoW sales 33.1%.
Over 95% of JLR’s retailers worldwide have totally/partially restarted their operations by now. Moreover, all of the company’s plants have resumed manufacturing, with the exception of the Castle Bromwich facility, which would gradually start up again in August. All plants are operating on single shifts, with social distancing measures in place and production ramping up as demand increases.
Post the resumption of operations, the Range Rover Sport, the new Range Rover Evoque, and the Land Rover Discovery Sport emerged as the bestselling vehicles.
Customer response to the new Land Rover Defender has been overwhelmingly positive, and as retailers have come back online, there has been a surge of interest in the Land Rover. Deliveries for the Defender have started to ramp up in the quarter, with 1,970 vehicles sold in June. This has come after operations only just resuming in the UK/Europe (May) and the US (June); China operations are scheduled to begin in July. JLR ended 1QFY21 with a stronger-than-expected cash position of nearly £2.7b (unaudited) and overall liquidity of around £4.6b, including the company’s £1.9b revolving credit facility, which remains undrawn. Felix Brautigam, chief commercial officer, Jaguar Land Rover, stated, “While the Covid-19 pandemic continues to impact the global auto industry, we are pleased to see initial green shoots of recovery. We are working alongside our retailers, planning for gradual recovery as lockdowns relax and economies respond. Through the quarter, we continued to introduce new and updated Jaguar and Land Rover vehicles to very positive response.”
The stock trades at 2.7x FY22 EV/ebitda and 0.7x P/BV. Maintain buy, with target price (TP) of ~Rs 126 (June 22-based SOTP).