Tata Motors third quarter consolidated net profit declined a higher-than-expected 52 percent year-on-year to Rs 1,628 crore on the back of a huge loss in its domestic business and lower profits at its luxury Jaguar Land Rover unit.
The company's consolidated revenue last quarter rose 2 percent to Rs. 46,090 crore, also below street expectations.
Analysts on average had expected Tata Motors to report a net profit of Rs 2,250 crore on revenue of Rs 47,277 crore, according to a CNBC-TV18 poll.
Tata Motors’s operating margins slumped to 2.2 percent from 6.7 percent.
The company's domestic operations have been hit hard due to sluggish sales growth across passenger cars and medium and heavy commercial vehicles sectors.
The India's largest bus and truck maker reported a standalone net loss of Rs 458 crore, compared with a profit of Rs 174 crore a year ago.
Standalone revenue declined to Rs 10,630 crore from Rs 13,338 crore.
Analysts had expected a standalone net loss of Rs 180 crore on sales of Rs 10,846 crore in the third quarter.
Tata Motors' total standalone sales (CV + PV) slipped 11 percent to 2.05 lakh units, mirroring the overall industry wide slowdown.
"Weak macro-economic environment and competitive pressures on pricing, continued to impact operations during the quarter," the company said.
Its UK headquartered JLR unit retailed 88,658 vehicles in Q3, up 14 percent from a year ago, driven by strong demand from China and sales of the Range Rover Evoque and Freelander SUVs.
However, net profit declined to GBP 296 million from GBP 393 million, while revenue rose 1.5% to GBP 3,804 million.
JLR operating margin slipped to 14 percent due to reasons including product mix, higher marketing costs and launch costs of the new Range Rover.
Tata Motors expects its domestic sales, especially CVs, will remain under pressure in the near-term due to the slowdown in the economic activity.
It will take at least six months for CV sales to rise if and when government initiates reforms and the economic activity picks up, said Karl Slym, MD.
Slym said that the company has also initiated several actions like enhancing customer experience at dealerships to boost passenger car sales.
The company has already reduced market inventory levels by 33 percent, he said.
It will also continue to refresh its products and launch new vehicles going ahead.
Variants of the Ace small truck, its Ultra LCV range, variants of its Prima range of M&HCVs and a CNG version of the Nano car are among the new launches expected over next few quarters.
Tata Motors shares closed at Rs 296.70 a piece, down 2.59 percent.