Jaguar LandRover - comment

S&P have upgraded JLR to BB-, with a stable outlook on the back of improving supply chain issues which will enable JLR to increase volumes to meet their record high order book. We concur with the short-term view of S&P, with stronger cashflows from higher sales resulting in some deleveraging. However, we urge some caution for the medium term as capital expenditure is expected to steadily increase over the coming years. This is to aid the electrification process. JLR have a strong order book comprising mainly Range Rover and Defender brands, but the continued success of JLR is dependent on a successful relaunch of their Jaguar brand.