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A number of factors have come together for Tata Motors in the fourth quarter (Q4) of 2012-13, helping it beat market estimates. Thanks to the strong Jaguar Land Rover (JLR) sales globally, consolidated sales grew 10 per cent year-on-year (y-o-y) to Rs 56,002 crore. The domestic market, too, has seen a seasonal uptick in volumes, which has helped narrow losses in the standalone business. However, no upgrade is likely, says Dhananjay Sinha, strategist at Emkay Global, even as he expects higher margins for JLR in FY14.
JLR has seen "strongest ever quarterly sales," which has driven the company's profitability. Despite losses in the domestic business, net profit is Rs 3,945 crore, about Rs 1,000 crore more than consensus estimates. The reason: a lower tax rate of 19 per cent in Q4 compared to 39 per cent in Q3.
Over a couple of years, JLR has been coming to the rescue of Tata Motors. However, in Q4, JLR beat its own records in quarterly sales. JLR reported its best-ever quarterly sales (up 19 per cent) and revenues grew 22 per cent y-o-y. This uptick in volumes and topline was largely driven by new launches. The refreshed product portfolio helped JLR maintain a strong sales trajectory across geographies. Sales in China grew 48 per cent, 27 per cent in the Asia Pacific, 20 per cent in the UK, 18 per cent in Europe, nine per cent in North America and 19 per cent in other markets. On the back of such strong sales growth, profitability improved sharply. JLR has also reported a 230 basis points (bps) y-o-y increase in operating margins at 17 per cent. JLR's operating profit has grown 41.5 per cent y-o-y.
Unlike Q3, when Tata Motors had shocked the Street with high losses in the domestic business, this quarter it has improved this, too. In Q4, the standalone business has seen some improvement in volumes and margins. While net revenue declined 32.5 per cent to Rs 11,060 crore, sequentially there has been growth of four per cent. Similarly, while operating margins are down 600 bps y-o-y to 3.6 per cent, sequentially these are up 140 basis points. This has helped keep losses at Rs 311 crore, compared to Rs 458 crore in Q3.
