Tata Motors, Tata Motors DVR down over 5% on disappointing Q1 results

Tata Motors (down 6% to Rs 393) and Tata Motors DVR (down 7% to Rs 226) hit fresh 52-week lows.

Tata Motors (down 6% to Rs 393) and Tata Motors DVR (down 7% to Rs 226) have hit their respective fresh 52-week lows after Tata Motors reported disappointing April-June quarter (Q1FY18) performance with sharp fall in operational performance of  Jaguar Land Rover (JLR).

The company has reported a consolidated net profit of Rs 3,200 crore in Q1FY18, mainly on account of one-time gain of Rs 3,609 crore relating to the changes made to the JLR pension plans. It had posted profit of Rs 2,551 crore in the same quarter of last fiscal year.

“Consolidated profit for the quarter was lower by Rs 793 crore due to translation impact from British pound to rupee,” the company said in its filing.

Consolidated revenues for the quarter declined 10% to Rs 58,651 crore, as its operating performance was hit by lower wholesale volume sales of JLR, excluding sales from the group’s China joint venture, and a slowdown in its heavy vehicle business, among other factors.

“Consolidated EBIDTA (earnings before interest, taxation, depreciation and amortization) margin declined by 550 bps QoQ and 540bps YoY to 8.5%, impacted by poor performance at JLR. JLR’s EBIDTA margin was down 665bps QoQ and 441 bps YoY to 7.9%. JLR’s financial performance was impacted by lower volume, geographical mix, higher incentives, higher marketing expenses and additional cost related to new launches,” analyst at Karvy Stock Broking said in result review, reiterate ‘buy’ rating on the stock.

Management expects JLR margin to improve ahead, on lower hedging losses. Also, model mix is likely to turn favorable with ramp up of sales for newly launched Land Rover products - Discovery and Velar, said analysts at Emkay Global Financial Services in result update.