Shares of Tata Motors fell in Monday’s trade, as the company’s wholesale sales for September came in at 26,461 units against market estimates of 27,000-28,000 units. Compared to last year, wholesale volumes are down 4.3 per cent, as the company addressed the issue of surplus inventory in the system and dispatched lesser units of Range Rover and XF due to portfolio refreshment in the coming months.
While the wholesale volumes have disappointed, Tata Motors has put out numbers of retail sales, which have grown 22 per cent year-on-year (y-o-y) to 36,907 in September. This is the first time it has disclosed retail sales data in great detail, which suggests that retail demand remains robust. The data also suggests that the company has addressed the issue of inventory that was sitting in the pipeline before it launches new products.
However, the good news is largely restricted to Evoque. If one removes the sales of Evoque (9,410 units) from September’s retail sales of 36,907 units, the company’s sales have stayed flat y-o-y, explains Deepak Jain of Sharekhan. Jaguar sales have declined seven per cent, compared to September 2011, while Land Rover is up 31 per cent. This has come as a bother for investors as sales of luxury cars is not showing any sign of weakness globally. Both Mercedes and BMW have posted robust sales.
Despite the fall, the view does not seem negative for the company as it is slated to launch new models in the coming months as the company has deliberately released lesser units of Range Rover and XF. In the coming months, the company’s planning to launch the Jaguar Sports Brake, which will be the fastest Jaguar so far. It has also showcased several others like Jaguar F type and the new Defender, which will be seen in the new James Bond film. The reason for decline in wholesale vehicles could well be the new launches.
Kotak Institutional Equities expects strong growth in JLR volumes to continue driven by new product launches. The brokerage now expects JLR to report £200 million of profit in 2QFY13 (+16 per cent y-o-y and -15 per cent q-o-q), which is higher by £30 million from its previous estimate. The brokerage says: “We expect revenues to grow by 14 per cent y-o-y as we expect average selling prices to remain flat y-o-y as lower volumes of Range Rover are compensated by higher volumes of Range Rover Sport. JLR to report Ebitda margin of 14.2 per cent in 2QFY13, marginally down from 1QFY13, which could be positive for the stock in our view.” Tata Motors is expected to report a consolidated profit of Rs 1,940 crore in Q2, a growth of four per cent y-o-y.
