An uphill climb

FY08FY09EFY10E Sales35,651108,054118860 JLR's contribution (%)

-

6464 EBIDTA4,4106,6757132 Net profit2,1673,4583804 EPS (Rs)51.656.261.9 P/E (x)9.48.77.8 E: Analyst estimates  While JLR's operational parameters are likely to improve over time, what it brings is size in revenues and will contribute over 63 per cent of the combined Tata Motors estimated turnover for FY09 at over Rs 100,000 crore.  To part fund JLR's acquisition, Tata Motors is coming out with three unlinked simultaneous rights issue of Rs 7,200 crore and this is likely to lead to an equity dilution of about 45 per cent.  At the current price of Rs 488, the stock is available at 9 times its fully diluted estimated FY09 consolidated EPS of Rs 56. While these valuations are not expensive, investors are better off waiting till December to gauge JLR's progress towards profitability and performance of Tata Motors' core CV business before committing their investments in this stock.