Strong sales at luxury Jaguar Land Rover unit helped Tata Motors third quarter consolidated net profit jump a better-than-expected 40% year-on-year to Rs 3,405.6 crore, even as forex losses and cost pressures hurt domestic business.
The India's largest commercial vehicle maker's consolidated revenue in October-December accelerated 44% from a year ago to Rs 45,260.3 crore, helped by strong demand for Jaguar, Land Rover vehicles, especially the new Evoque, in markets like China. Pick up in domestic passenger vehicle sales led by Nano also boosted earnings.
Analysts on average had expected Tata Motors' third quarter consolidated net profit at Rs 2,500 crore on revenue of Rs 43,365 crore.
Its consolidated EBITDA margin was up 70 bps to 16% in the three-month period.
But it was totally a different picture in its domestic operations.
Tata Motors' standalone net profit slipped near 58% from a year ago to Rs 173.7 crore, while revenue rose 18% to Rs 13,337.9 crore.
Standalone EBITDA margin slumped over 400 bps to just 6.7% as high raw material costs and foreign exchange losses hurt.
Company officials say increasing costs and competition remain a challenge domestically and Tata Motors will focus more on cost reductions and controlling operating expenses apart from looking at price hikes from time-to-time to ease pressures.
It also expects forex losses will reverse as the rupee has appreciated again.
Tata Motors sold 131,220 commercial vehicles in domestic market, up 15.5% from a year ago in Oct-Dec. It sold 85,963 passenger vehicles in the domestic market, up 33.2% from a year ago led by the Nano.
The Nano is seeing "good traction" in sales, said MD P M Telang. The company is taking various steps like increasing special Nano access points to 300 from 120 now to boost sales further. Telang expects Nano sales will top 10,000 units/month in the next 1-2 months.
The company has also set up special display showrooms for boosting sales of Fiat cars, where "there is significant scope for improvement."
Tata Motors is also exploring opportunities in ASEAN countries to set up manufacturing plants and also exporting Nano.
Currently Tata Motors exports Nano to Sri Lanka and Nepal.
Tata Motors had 59.4% market share in domestic CV industry and 14.6% in PV.
Meanwhile JLR has secured 700 million pound revolving line of credit from 8-10 banks. Officials said it is a flexible line of credit, which could be drawn for operational purposes.
It doesn't have any immediate plans to raise funds in the domestic market.
Tata Motors shares closed at Rs 267.90, up 3.7% over their previous close.
Source: www.moneycontrol.com
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