Tata Motors Q4 net seen rising 22%

Strong sales growth in the commercial and passenger vehicle segments may enable Tata Motors Ltd to post a 22 per cent rise in topline as well as bottomline for the January-March quarter from the year-ago period, according to an average of estimates of 12 brokers polled by Crisil MarketWire.

Sales are seen at Rs 5,.045.3 crore, while net profit is likely at Rs 357 crore. The company will detail its results Tuesday.

Net profit estimates vary from a low of Rs 340 crore to a high of Rs 477 crore. Revenue forecasts for the quarter range from Rs 4,410 crore to Rs 5,266 crore.

The key thing, analysts said, is to watch out for the operating margin, which is under strain due to a rise in input costs.

Input costs have spiralled with the escalation in steel and aluminium prices. Competitive pressures have also increased with new model launches, which has led to an overall dip in operating margins of the industry.

Analysts said despite having Tata Iron & Steel Company Ltd, India's largest steel manufacturer, as a group company, Tata Motors gets no preferential treatment from it.

"They (Tata Motors and Tata Steel) keep an arm's length distance. So the raw material cost for Tata Motors won't be any different from any other buyer of Tata Steel," said an analyst with a domestic brokerage firm.

"I would watch out for the RM (raw material) cost and forex gain/loss the company have been booking for the last couple of quarters," he said.

He said the forex gain/loss is because of exports.

"We expect EBITDA (operating profit) margins to register a decrease of 20 basis points quarter-on-quarter and 130 basis points year-on-year to 13 per cent. Continued pressure on the raw material front would put pressure on margins. Consequently, we expect EBITDA rise to be limited to 13.6 per cent year-on-year," said an ICICI Securities note on Tata Motors.

Motilal Oswal Securities, however, sees the company's margins for the March quarter improving by 50 basis points sequentially, but falling by 120 basis points from the year-ago period.

Analysts said due to a hike in vehicle prices in the March quarter, the company's realisations may have gone up.

Also, since the company has a presence in the diesel vehicles segment, its growth in the passenger car segment is likely to be higher than the industry's growth rate.

Tata Motors shares closed at Rs 448.75 today, up 3.8 per cent over Friday.