Jaguar Land Rover boosts Tata Motors profits
Tata Motors , India's top vehicle maker, reported a rise in sales and margins at its Jaguar Land Rover (JLR) unit as luxury buyers returned after the global crisis, but analysts said that the revival had to be sustained for continued recovery.
JLR had been a drag on the company's performance since it was acquired in 2008 from Ford for USD 2.3 billion, with the global downturn hitting consumer spending on its high-end vehicles such as Jaguar's X-series and Land Rover's Range Rover vehicles.
Demand has started to pick up again and sales of the brands rose 31.5% in November and December, compared with the year earlier.
For the quarter to December sales volumes rose 28% from the September quarter with improvement in volumes coming mainly from North America, Europe and China, the company said in a statement.
Jaguar Land Rover business turned profitable on a net basis in the December quarter with a net profit of Rs 4.17 billion rupees. (USD 90.3 million)
"There has been a recovery, no doubt and the sings of revival in Europe and North America is encouraging, but it is still fragile," said KK Mittal, head of portfolio management services at Globe Capital.
"At the domestic level, while commercial vehicles sales outlook looks good, its passenger car segment will be under pressure from increased competition," he said.
In a sign of its return to its former glory, Jaguar this month announced its return to classic race 24 hours of Le Mans this year with the Jaguar RSR XKR GT2, after being absent from it for more than a decade.
Tata Motors, whose mainstay is the trucks and buses in India, also produces the Nano, billed as the world's cheapest car.
Last month, it reported a net profit of Rs 4 billion for its domestic operations in the December quarter on increased demand for its cars, trucks and buses.
Brokerage UBS, which has upgraded Tata Motors to a "buy" from "sell" said in a recent research note it had turned bullish on prospects of a significant turnaround at JLR and a growth in domestic commercial vehicles business.
Tata Motors reported a consolidated net profit of Rs 6.5 billion rupees (USD 140.7 million) for the December quarter, on net sales of Rs 259.8 billion.
Sales in India, one of the world's fastest-growing markets, have been boosted by a better economic climate and government stimulus that reduced factory-gate duties on vehicles last year.
Automobile sales in the country have risen an annual 24% in the first 10 months of 2009-10, with cars rising about 25% and trucks more than 30%.
At 1:33 p.m. (0803 GMT), shares in Tata Motors were up 5.5% at Rs 705.30.
The stock, valued at USD 7.7 billion, had risen 34% in the December quarter, outperforming the main index that climbed about 2%.
(1 USD =46.2 rupees=0.66 pound)
Tata Motors stock price
On October 23, 2014, Tata Motors closed at Rs 516.95, down Rs 2.5, or 0.48 percent. The 52-week high of the share was Rs 544.50 and the 52-week low was Rs 331.05.
The company's trailing 12-month (TTM) EPS was at Rs 0.08 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 6461.88. The latest book value of the company is Rs 59.58 per share. At current value, the price-to-book value of the company is 8.68.
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