Tata Motors, India’s biggest automaker, on Tuesday beat analysts’ estimates with a more than two-fold jump in March quarter consolidated net profit and said it planned to merge its UK-based Jaguar and Land Rover businesses.
Boosted by strong demand for the newly launched Evoque sport utility vehicle and a one-time tax credit at the Jaguar and Land Rover units, the city-based company said consolidated net profit rose to Rs 6,234 crore, from Rs 2,637 crore in the year-ago quarter. Analysts had expected net profit to be in the range of Rs 3,800-4,000 crore. Net consolidated sales surged 44 per cent to Rs 50,608 crore. Total sales in terms of volume grew 17 per cent to 286,019 units, from 244,595 units.
Jaguar Land Rover contributed 91 per cent to Tata Motors’ net profit, as sales swelled by 48 per cent to 98,021 units because of robust demand in China, pegged to become the UK-based luxury brands’ second-largest market this year. China is the third-largest market for Jaguar Land Rover. Profit after tax in the three months to March more than doubled to £696 million.
“Consolidated net profit includes Rs 1,826 crore of previously unrecognised deferred tax assets, due to uncertainty about future recoverability which have now been recognised due to sustained improvement in business performance and certainty of future profitability outlook,” Tata Motors said in a statement.
The company said it would merge Jaguar and Land Rover by September. Operations such as human resources and information technology of the companies would be combined to enhance efficiency.
Consolidated margins improved marginally to 14.1 per cent, from 13.8 per cent, due to improved demand for better margin products such as the Evoque.
Challenging market environment in India, with increased fuel costs and high inflation, brought down the company’s stand-alone net profit, which fell 1.3 per cent to Rs 565 crore from Rs 573 crore.
Prakash Telang, managing director (India operations), Tata Motors, said, “Rising fuel costs and increased interest expenses, among other things, impacted the overall demand for passenger and commercial vehicles in India. Freight rates have also dipped. Demand pressure is expected to remain on the medium and heavy commercial vehicle side.” Stand-alone sales grew 14 per cent to Rs 16,297 crore.