Commercial vehicle and luxury car maker Tata Motors' third quarter profit on consolidated basis fell sharply by 96 percent year-on-year to Rs 112 crore, impacted by big loss in domestic business and operational weakness in JLR. The stock lost 7.66 percent in late trade, before closing 4.6 percent down at Rs 482.05 on the BSE.
Revenue during the quarter declined 4.3 percent to Rs 68,541 crore compared with Rs 71,616 crore in year-ago quarter.
Lower wholesale volumes & relatively weaker product mix in JLR and degrowth in commercial vehicle business due to demonetisation hit topline growth despite JLR's retail sales growth of 8.5 percent.
Operating income plunged 41.7 percent to Rs 5,161 crore and margin contracted 490 basis points to 7.6 percent compared with corresponding period of last fiscal.
Earnings barring topline missed analysts' expectations. Profit was estimated at Rs 2,384 crore on revenue of Rs 67,328 crore and operating profit was expected at Rs 8,290 crore with margin at 12.3 percent for the quarter, according to analysts polled by CNBC-TV18.
UK subsidiary Jaguar Land Rover's net income during the quarter dropped 62 percent year-on-year to 167 million pound but revenue increased 13.1 percent to 6,537 million pound on retail volume growth.
JLR's retail sales were 149,288 units in Q3, up 8.5 percent on strong demand for products, primarily reflecting higher volumes in China, North America and Europe led by strong sales of Discovery Sport, F-PACE and the new long wheel base XFL in China, Tata Motors said.
Its operating profit fell 26.7 percent to 611 million pound and margin came in single digit, shrinking 510 basis points to 9.3 percent on year-on-year basis, which both were far below estimates.
Lower wholesale volumes & less favourable product mix; unfavourable variable marketing expenses; higher new model launch costs and Biennial pay negotiation settlement; and hedging losses impacted operational earnings of JLR.
According to analysts polled by CNBC-TV18, operating income was expected at 865 million pound and margin at 13.4 percent for the quarter.
On standalone basis (i.e. domestic business), Tata Motors posted a big loss of Rs 1,046 crore in the quarter ended December 2016 against Rs 137 crore in corresponding quarter of last fiscal and that was quite higher compared with Rs 500 crore estimated by analysts. In previous quarter (July-September), the loss was Rs 631 crore.
Revenue grew by 1.5 percent year-on-year to Rs 11,222 crore in quarter ended December 2016.
During the quarter, commercial vehicle segments witnessed demand shrinkage due to the demonetisation, with medium & heavy commercial vehicle sales falling 9 percent YoY and light commercial vehicle segment was overall flat, the company said.
Passenger vehicles segment grew by 25.4 percent YoY with car segment growth of 31.1 percent YoY on the back of continued strong response to the Tiago, it added.
Operating profit on standalone basis slipped 84.6 percent to Rs 76.5 crore and margin contracted by 430 basis points to 0.7 percent compared with year-ago quarter.
The company said finance cost during the quarter declined 23.5 percent to Rs 870.7 crore while tax cost increased 29.6 percent to Rs 867 crore YoY.