Tata Motors, India’s biggest automobile company, today beat market expectations by posting a consolidated net profit of Rs 1,988 crore for the quarter ended June 30.
Substantial improvement in Jaguar and Land Rover (JLR) operations and improved standalone sale of trucks and buses helped it get out of the red, having showed consolidated loss of Rs 328 crore for the same quarter last year.
Standalone data here, as opposed to the consolidated one, refers to those of Tata Motors alone, excluding those of associate and subsidiary companies, JLR being one of the latter.
The street was expecting the company’s profit to be in the region of Rs 1,000-1,300 crore.
Stock soars
The result, declared during market hours, pushed the company’s stock to its highest level in 19 years before closing at Rs 957.30, an increase of 4.17 per cent over yesterday’s close.
Consolidated income from operations jumped to Rs 27,771 crore, an increase of 65 per cent for the reporting period as against Rs 16,841 crore reported in the corresponding quarter a year earlier. Income from standalone operations grew to Rs 10,351 crore, an increase of 63 per cent from Rs 6,349 crore.
JLR returned to profits for the third successive quarter, of £221 million (Rs 1,616 crore) as against a loss of £64 million (Rs 468 crore) last year. Operating margins on a consolidated level rose to 14.6 per cent as compared to 3.6 per cent earlier. However, the standalone level dipped to 11.3 per cent, from 11.4 per cent.
The company saw standalone sales of 100,186 units during the quarter, an increase of 39 per cent from 72,216 units at the standalone level. Sales of JLR witnessed an increase of 25 per cent to 59,100 units, as against 47,100 units.
C Ramakrishnan, chief financial officer, said, “We are operating at a very comfortable level of operating margins. We have to protect our margins from here but there are cost pressures building up. We may look to revisit vehicle prices, like we have done in the past.”
JLR share
Income from the two luxury marquees (Jaguar and Land Rover) for the quarter more than doubled to £2.2 billion (Rs 16,546 crore) as compared to £1.12 billion (Rs 8,229 crore). JLR’s share in Tata Motors’ consolidated revenue has shot up to 59.6 per cent from 48.9 per cent.
Carl-Peter Forster, managing director and CEO, Tata Motors, said, “The US and European market is seeing a strong surge in demand, so much so that we are not able to meet them. Chinese growth is cooling off for the period. We are trying to work with suppliers at de-bottlenecking the supplies and improve production.” Most models of JLR are getting impacted due to shortage of adequate supplies of engines from Ford Motor Company (FMC), he added. There were production losses due to the shortage during the quarter.
Senior officials said de-bottlenecking will take time. They wouldn’t say how long.
JLR is working towards expanding its product development segment and will hire engineers in due course. The company is actively looking at developing smaller capacity engines in-house but will continue to buy these from FMC for the full period of the agreement.
Forster also stated JLR would look to share the smaller engines with Tata Motors in the coming period. Net profit at the standalone level dropped to Rs 395 crore, a decrease of 23 per cent for the quarter, as compared to Rs 513 crore. The drop was seen because the company had made an unusual gain last year in the same quarter, with profits on sale of Tata Steel shares.
The company also stated that it had concluded today a postal ballot which sought shareholders’ approval on various topics, including raising up to Rs 4,700 crore. It hasn’t decided how to do this.
