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Sales of Jaguar and Land Rover (JLR) in August have come below the Street's estimates but analysts remain bullish. Both retail and wholesale volumes in August stayed tepid as consumers held back, awaiting launch of products and refreshments. Overall volumes of JLR in August grew 2.4 per cent to 31,650 units. The month saw weak offtake because Jaguar sales declined 11 per cent even as Land Rover volumes grew five per cent.

Despite the August numbers, JLR in FY15 has seen volume growth of 17 per cent. This is ahead of the Street's estimates and expected to pick up in the second half of the current financial year, as deliveries of new products begin. Production of the Evoque is expected to commence in China later this year, which would ease capacity constraints faced by the UK plant. Sales of high volume models of the Discovery Sport and XE will also begin during the second half of this financial year. Launch of the new Discovery and XF in FY16 will also support volume growth.

Macquarie Research expects JLR sales to register an 18 per cent compound annual growth between FY14 and FY19. The brokerage says the decline in August sales was primarily due to lower retail sales in the UK and number plate changes that are due. There's consensus on the Street that JLR sales growth will remain robust over the next three years as the company has a good product line. Some analysts are relatively more bullish than others and expect the company to hit one million units in the coming years. In FY14, JLR sold 430,000 units and plans to sell 750,000 by 2018. If the company manages to grow volumes by 18 per cent between FY14 and FY19, then it can easily hit the one million mark.

Religare Institutional Research also expects JLR's sales to improve in times to come. The brokerage says though JLR missed August volume estimates, it is retaining FY15 and FY16 volume growth at 15 per cent and 14 per cent, respectively, due to growing strength in the China market, planned capacity additions and contribution from launches over the next two years. As deliveries of the recently-launched Jaguar XE (high-volume segment) and Discovery Sports (replacing the Freelander) begin, volume numbers would automatically improve.

While the outlook for JLR remains robust, analysts believe revival in India's commercial vehicle market would give a further boost to the stock. From a valuation perspective, too, Macquarie believes the stock is trading at an attractive seven times its FY16 price/earnings multiple, lower than the valuation at which European premium auto stocks are trading at (8.4 times).