Tata Motors Q1 net down 49%; China drags JLR profit 29%

Consolidated operating profit (earnings before interest, tax, depreciation and amortisation) plummeted 18.2 percent year-on-year to Rs 9,109 crore and margin dropped 230 basis points to 14.9 percent against analysts' estimates of Rs 9,424 crore (down 15.4 percent) on operating profit front and 14.9 percent on margin front.

Other income in Q1 increased 44 percent to Rs 307.23 crore and tax expenses reduced by 25.8 percent to Rs 1,570.3 crore year-on-year while finance cost jumped 18.2 percent to Rs 1,117.4 crore during the same period.

Tata Motors has posted a forex loss of Rs 107.3 crore in Q1 against forex gain of Rs 94 crore in the year-ago period.

Jaguar Land Rover

UK-based subsidiary and luxury car maker JLR in Q1 has registered a 29 percent drop in bottomline at pound 492 million and a 6.6 percent decline in revenue at pound 5,002 million year-on-year on dismal performance in China. China's luxury car market accounts for 20 percent of JLR sales.

"The financial performance in the quarter was lower than the strong corresponding quarter last year due to softer sales in China partially offset by strong performance in the UK, Europe and North America," Tata Motors reasoned.

Barring Evoque, all other models like Discovery Sport, Defender and RR continued to do well in June quarter. Jaguar sales volumes increased by 8 percent Y-o-Y (up 5.5 percent sequentially) while Land Rover volumes slipped 2.4 percent Y-o-Y (down 11 percent Q-o-Q).

The company said Evoque sales were lower due to the ramp up of localised production in China and softer market conditions there. Jaguar sales volumes were down as the sales of XF and XJ fell ahead of the all new lightweight XF and the refreshed XJ 16MY, on sale in autumn this year, partially offset by the successful introduction of the new Jaguar XE, it added.

However, Land Rover maintained healthy sales in Q1 with Range Rover, Range Rover Sport Discovery and Defender all growing compared to the corresponding quarter last year, it said.

Operating profit during the quarter slipped 24.5 percent to pound 821 million compared to pound 1,087 million in the year-ago period.

Standalone

Standalone business has seen an improvement Q4FY15 onwards due to recovery in passenger vehicle (PV) and MHCV segments. In Q1, company sold 1.17 lakh vehicles, higher by 6.2 percent compared to 1.10 lakh units sold in same quarter last fiscal. Passenger vehicle business saw good resurgence on new launches - Zest, Bolt and GenX Nano.

PV sales grew by 27.4 percent and MHCV volumes jumped 20.7 percent Y-o-Y. However, light commercial vehicle (LCV) volumes (Tata ACE) continued to be under pressure with sales degrowth of 19 percent due to tough financing environment and lack of last mile load availability.

Revenue for the quarter stood at Rs 9,297 crore, a growth of 20.7 percent compared to Rs 7,705 crore in the same quarter last year. Net profit dropped 34.6 percent to Rs 257.6 crore from Rs 393.65 crore year-on-year.

Other income (profit on sale of investments in subsidiary companies and dividends from subsidiary companies) during the same period slipped 48 percent to Rs 805 crore from Rs 1,549 crore.

Speaking to CNBC-TV18, Piyush Jain, Equity Research Analyst, Morningstar Investment Advisor Pvt. Ltd says that the operating profit margins for the company are hurt because of steep price discounts in China.Meanwhile, Gaurang Shah, VP, Geojit BNP Paribas financial Service says the firm is positive on shares of Tata Motors and Tata Motors DVR from a long-term perspective.With the lined-up launches of Bolt, Zest and the Safari Storme, expansion of geographies on JLR front and the expected rate cut, the company is likely to benefit, Shah says. The scrip of Tata Motors (which announced earnings post market hours) closed at Rs 392.55, up Rs 9.65, or 2.52 percent on the BSE.Posted by Sunil Shankar Matkar