Tata Motors shares slump on JLR margin concerns

MUMBAI Thu Jan 24, 2013 4:37pm IST

1 of 2. Men walk inside a Tata Motors showroom on the outskirts of Agartala, November 7, 2012.

Credit: Reuters/Jayanta Dey/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Shares in Tata Motors(TAMO.NS) slumped as much as 10 percent on Thursday after the auto maker said its Jaguar Land Rover (JLR) unit was likely to report a lower profit margin in the October-December quarter.

The warning late on Wednesday came as a surprise given Tata shares hit a record high earlier this month on a rally sparked by expectations for improving sales at JLR, especially in the key China market, and optimism about the launch of new models.

Tata said sales volumes were likely to be higher than in the previous two quarters, but warned earnings before interest, taxation, depreciation and amortisation (EBITDA) could fall due to exchange rate fluctuations and a higher mix of cheaper Evoque sports utility vehicle sales.

"Given that adverse currency movement and a weak product mix - led by Evoque - are the primary factors driving down margins, the pain may spill over to FY14," Mumbai-based financial services firm IDFC said in a report dated on Wednesday.

UBS cut its fiscal 2013 and 2014 earnings-per-share estimates for Tata Motors by 6 percent according to an email sent to clients, and maintained a "sell" rating on the stock, citing "expensive" valuations.

Tata Motors shares ended down 6.26 percent at 293.45 rupees, off a record high of 337.40 rupees reached on January 10. Earlier, shares had fallen around 10 percent.

Shares in the auto maker surged 22.7 percent in November and December, helping the blue chip become the best performer among the Sensex constituents last year, on expectations a recovery in China would boost JLR model sales.

JLR was also set to unveil eight new vehicles in 2013, including a convertible sports car and a new hybrid Range Rover.

The auto maker is due to report earnings in February, but has not yet specified a date.

On Thursday, South Korea's Hyundai Motor posted a surprise 5.5 percent fall in quarterly net profit, missing forecasts, as record car sales were in part dented by the impact of a stronger local currency.

(Reporting by Rafael Nam; Editing by Richard Pullin)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Press Event

Press Event

Modi takes tea, but no questions, in first press event as PM.  Full Article 

School Shooting

School Shooting

Two killed, four wounded in Washington state school shooting.  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage