Tata Motors Q1 net dips 48.7% to Rs 2768.91 crore

Tata Motors ‘ June quarter earnings shocked the street Friday with the consolidated profit declining 48.7 percent year-on-year to Rs 2,769 crore, dented by dismal performance from Jaguar Land Rover (JLR) in China.

The economy in China, a big market for Tata Motors’ luxury arm Jaguar Land Rover, has slowed to its slackest pace in 25 years and low consumer confidence is affecting auto sales in that country.

The company had posted a net loss of Rs 53.63 crore in the same period of previous fiscal, it said in a filing to BSE.

Analysts, on average, expected Tata Motors to report a profit of Rs 31 billion, on revenue of Rs 630.68 billion.

The stock ended the day in red, down 7.01 per cent or Rs 6.10 at Rs 80.90. As a result, the overall CV sales were nearly flat in the quarter.

Land Rover maintained healthy sales in the quarter with Range Rover, Range Rover Sport Discovery and Defender all up compared to the corresponding quarter a year ago.

The company’s profit and revenue fell short of expectations.

Revenues for the quarter declined 5.66% to Rs 610.19 billion, due to lower sales and weaker geographic mix at Jaguar Land Rover (JLR), partially offset by strong revenue growth in standalone business on the back of continued M&HCV growth.

The company’s commercial vehicles sales were boosted by heavy duty truck sales, while new model launches in the passenger vehicle segment, such as the Zest, Bolt and Nano GenX, pushed up passenger vehicle sales. Operating profit (EBITDA) for the quarter stood at £ 821 million (Rs 8,081 crore) at 16.4 percent, against £ 1,087 million (Rs 1,097 crore) for the corresponding quarter previous year. Ltd says that the operating profit margins for the company are hurt because of steep price discounts in China. Evoque sales were lower due to the ramp up of localised production in China and softer market conditions there.

Shares of Tata Motors rose 2.7 percent to 393.40 rupees in Mumbai trading on Friday, before the earnings announcement.