Mumbai: A yet another powerful show by Jaguar Land Rover (JLR) helped city-based Tata Motors, India’s largest automobile manufacturer, review a 213 % jump in consolidated net profit for the quarter finished June at Rs 5,398 cr, against Rs 1,726 crore in the corresponding quarter last year.
As the profit beat the Bloomberg consensus estimate of Rs 3,776 cr, the Tata Motors stock increased, closing 3.33 % higher on the BSE.
A general volume improve in the situation of JLR; a better market mix, backed by a rise in emerging markets; & a rich product mix, supported by the achievements of the Range Rover Sport & the Jaguar F-Type, assisted the Tata group company improve net profit. Tata Motors’ net consolidated sales increased 38 % to Rs 64,683 cr from Rs 46,796 crore in the corresponding quarter last year.
With China, JLR’s most profitable market, accounting for 30 % of wholesale sales (21 % in the year-ago period), the combined operating profit edge of Tata Engines improved to 18.2 % from 14.5 % the year before.
Ralf Speth, Chief Executive of JLR, said, “We have had an incredible market mix & an even better product mix. Despite serious local issues, the economy of China is very excellent. Russia & Ukraine will have an effect, as will issues in Europe; the US (market) is coming back. But I am convinced China, the largest market for the automobile sector, will be unchanged. The UK’s pound has been more powerful, and this has also helped.”
Margins in China are required to take a small strike, with the government directing a few luxury carmakers for example JLR to cut price, after these were found to be overcharging. Last month, JLR cut costs 5-7 %.
The poor performance of the standalone entity, though, continued in the June quarter at the standalone level, Tata Motors saw its net profit drop 44 % to Rs 394 cr from Rs 703 cr in the year-ago period. The drop was largely offset out by the Rs 1,597-cr (£150-million) dividend received from JLR.
Even as operating loss was stood at Rs 298.14 cr, against Rs 105.19-cr profit in the corresponding period last year, net sales fell to Rs 7,705 cr from Rs 9,105 crore the year earlier.
“Macroeconomic factors continued to effect need for the entire commercial vehicle sector. The company under-performed the sector, largely since it corrected inventory across channels for offering highest possible room for new products in the 2nd quarter, namely the Zest,” the company said.
At the standalone level, volumes declined 26 % to 108,296 units from 146,988 units sold in the corresponding period last year. During the same period, JLR’s wholesale volumes increased 27 % to 115,156 units.
For the June quarter, JLR’s net sales increased to £693 million (about Rs 7,000 crore), an increase of 128 % against £304 million (about Rs 3,000 cr) in the year-ago period. During the same period, the company’s working profit margin enhanced from 15.8 % to 20.3 %.
Tata Motors is seeing a revival in commercial vehicle sales and is, so, hopeful the Zest (its new compact sedan) will lead a turn-around in the passenger vehicle segment. On the JLR front side Tata Motors will release the new Discovery Sport, the Jaguar XE & the Ingenium family of 2-litre engines from a new plant in the UK. Its new joint venture plant in China has already started operations.
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