Mumbai: Tata Motors, India’s top vehicle maker, on Friday posted an unexpected September quarter consolidated net profit, aided by investment returns and strong volume growth from its British Jaguar Land Rover unit.
Jaguar Land Rover (JLR) saw sales volume rise 23% from the previous quarter, and Tata Motors said there were signs of improved demand for other key units after a global slump in the auto sector.
“It is a surprise result. We did not expect the turnaround to happen so fast. Prima facie, it looks like the volume growth they had in the quarter and better pricing must have led to this,” said Surjit Arora, auto analyst with Prabhudas Lilladher.
New JLR products such as the upgraded Land Rover, Range Rover Sports and Discovery 4 were getting a good reception and aggressive cost reduction had also paid off, Tata Motors said.
“The business is witnessing some stability in the external environment with certain key markets showing signs of recovery,” it said in a statement.
JLR made an operating profit of £41.3 million in the quarter, but with debts of Rs9,000 crore ($1.9 billion) it made a net loss of £60 million in Tata’s fiscal second quarter of the 2009-10 year.
Ahead of the results, Citi said it expected JLR to become profitable at the operating profit level by the fiscal third quarter, through cost cutting initiatives and better pricing.
Auto sales have been improving in India for most of this fiscal year, compared with a 1% rise in sales in 2008-09. Car sales are expected to rise by double digits this year, according to industry estimates.
Tata Motors, which has about 60% of India’s truck and bus market, the world’s fifth-biggest, reported a consolidated profit of Rs21.78 crore ($4.7 million) for its fiscal second quarter ended September.
In the year-ago quarter, the company posted a consolidated net loss of Rs942 crore.
The company made a net loss from ordinary activities of Rs2.15 crore, but investment returns of Rs19.69 crore and its share of minority interests pushed in to a net profit.
In October, Tata Motors reported a standalone net profit, excluding results from JLR, of Rs729 crore.
The results were released in the final minutes of trade on the sharemarket. Shares in Tata Motors, valued at $7.3 billion, ended down 0.8% at Rs629.50 in a Mumbai market that fell 1.3%.
The shares have quadrupled in value this year, far outstripping a rise of more than 70% in the main index.