Tata Motors net down; beats Street

Company's consolidated profit for the quarter stands at Rs 3,945 cr as against Rs 6,234 cr posted in same quarter a year ago

Aided by the continued strong performance by Jaguar Land Rover (JLR) and the pruning of losses at the stand-alone level, Tata Motors posted an estimate-beating performance in the fourth quarter.

Its consolidated profit for the quarter ended March 31, stood at Rs 3,945 crore against Rs 6,234 crore posted in the same quarter a year earlier, a drop of 37 per cent.

However, the net profit of last year’s corresponding quarter cannot be directly compared with the reporting quarter as it contained an usual item of tax credit amounting to Rs 1,800 crore. Analysts had estimated a net profit of about Rs 3,000 crore for the reporting quarter.

The company improved its operating margins slightly to 14.9 per cent (consolidated) in the reporting quarter as against 14.1 per cent reported in the same quarter a year earlier. Earnings before interest, taxes, depreciation and amortisation (Ebidta) stood at Rs 8,329 crore in the quarter under review, compared to Rs 7,179 crore in the year-ago period, a growth of 16 per cent.

Boosted by strong demand for the Range Rover and Jaguar XF and XJ, income from operations stood at Rs 57,082 crore, a growth of nine per cent, compared with Rs 52,178 crore posted in the year-ago period.

The company’s stock closed at Rs 303.80 today on BSE, up 2.69 per cent from yesterday.

Tata Motors reported its second straight quarterly net loss for the quarter at the stand-alone level at Rs 312 crore. The loss, however, was far below analysts’ estimates of about Rs 500 crore. In the corresponding quarter of the previous year, the firm had posted a net profit of Rs 565 crore. On a stand-alone basis, operating margins, too, plummeted to 3.6 per cent for the quarter against 9.5 per cent recorded in the same quarter last year.

Net revenue, which was heavily dependent on demand for heavy trucks and buses, posted Rs 12,046 crore during the quarter, a fall of 32 per cent as against Rs 17,824 crore posted in the corresponding quarter previous year.

The subsidiary of JLR reported a net profit of £378 million (Rs 3,213 crore) for the reporting quarter, a drop of 46 per cent as against £696 million (Rs 5,916 crore) reported in the same quarter the previous year.

Operating margins of the two brands — Range Rover and JLR — improved to 16.9 per cent for the quarter against 14.6 per cent (consolidated). Net sales grew to £5.05 billion (Rs  42,950 crore) for the quarter, a growth of 22 per cent as against £4.14 billion (Rs 35,224 crore).

JLR sales in China, which is set to overtake Europe this year and become its largest market, grew by more than 40 per cent than last year. The company is on course to set up a assembly unit in that country. JLR will be launching eight new products this year, said a senior company executive.

Highlighting the problems in the home market C Ramakrishnan, chief financial officer of Tata Motors, said: “External environment and overall economic activities remain stressed resulting in overall demand continuing to remain under pressure mainly for the MHCV (medium and heavy commercial vehicle) segment.”

However, the dismal performance is not stopping the company. Tata Motors will launch 40-50 new products in the commercial vehicle space, a new product in on the Ultra platform in the LCV (light commercial vehicle) space, new variants on the Prima and refreshed car models this year.

Further variants of the Nano, with one starting next month, will be seen in the market. It is also investing around Rs 3,000 crore in capital expenditure and product development at the stand-alone level and £2.75 billion (Rs 23,375 crore) in JLR this year.