Mumbai: India’s largest auto maker Tata Motors Ltd on Tuesday said its consolidated fourth quarter net profit more than doubled, beating Street estimates, as it benefited from robust sales at its UK subsidiary Jaguar Land Rover (JLR) and a one-time tax credit.
JLR, which Tata Motors bought in 2008 from Ford Motor Co. for $2.3 billion (around Rs 12,790 crore today), makes up 90% of the company’s profit and 70% of revenue. Tata Motors plans to invest £2 billion (around Rs 17,420 crore) in JLR this year to expand its production and line-up of vehicles.
Net profit in the three months ended 31 March rose 136% to Rs 6,234 crore from Rs 2,638 crore in the year-ago period, the company said in a statement. Net sales rose 43% to Rs 52,178.83 crore. The profit included a Rs 1,826 crore tax credit. A Bloomberg poll of analysts had estimated Tata Motors would turn in a net profit of Rs 3,822 crore on sales of Rs 50,287 crore.
Led by new models such as the Evoque compact sport utility vehicle, JLR sold 98,021 units in the quarter, an increase of 48% year-on-year. JLR’s chief executive Ralf Speth said the UK unit of Tata Motors was witnessing strong demand in all its markets.
“Even if you normalize the tax credit, their net profit margins have shot up,” said Deven Choksey, managing director at Mumbai-based KR Choksey Shares and Securities Pvt. Ltd. “The results have been boosted by the strong performance of the Jaguar Land Rover brands.”
Slowing sales in China are a point of concern. Surjit Arora, an analyst with Prabhudas Lilladher Pvt. Ltd, was sceptical about the company’s growth momentum in China as demand slows in one of the biggest markets for luxury cars.
Asia’s largest economy still remains a “strong growth market for us”, Speth said. He said the company had just missed out on its target of making China its No. 2 market because of slowing economic growth.
JLR’s joint venture with Chery Automobile Co. Ltd is awaiting regulatory approvals from the Chinese government, he said.
The planned investment this year will help increase production at the British unit and line-up of new models, Speth said. The UK subsidiary is also in the process of merging Jaguar and Land Rover into a single operational entity.
JLR’s global sales surged 51% in March from a year earlier. The company said on 13 March that it would add 1,000 jobs and move to a three-shift, 24-hour production at its Halewood plant in England to meet demand for models such as the Evoque.
During the quarter, Tata Motors’s domestic operations recorded a profit of Rs 565 crore, down 1.3% from Rs 573 a year ago. Among other things, the company’s cost of materials consumed went up to Rs 9,651 crore from Rs 8,177 crore a year earlier.
The Tata Motors stock ended at Rs 275.90 on BSE, down 0.25%. The benchmark Sensex index rose 0.13% to close at 16,438.58 points. The earnings were reported after market hours.
Bloomberg contributed to this story.
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