Tata Motors Q3 net profit triples on JLR sales

MUMBAI Mon Feb 10, 2014 7:03pm IST

1 of 3. Showroom attendants polish a vehicle under a Jaguar logo at a Jaguar Land Rover showroom in Mumbai February 13, 2013.

Credit: Reuters/Vivek Prakash

Stocks

   
Kishore Pandey, 82, lies on a bed as his daughter, Usha Tiwari, holds him and a priest stands by them (L) at Mukti Bhavan (Salvation House) in Varanasi, in the northern Indian state of Uttar Pradesh, June 19, 2014. REUTERS/Danish Siddiqui

Waiting to die at Salvation House

The city of Varanasi is Hinduism's holiest city and many Hindus believe that dying there and having their remains scattered in the Ganges allows their soul to escape a cycle of death and rebirth.  Slideshow 

MUMBAI (Reuters) - Tata Motors Ltd (TAMO.NS), India's biggest automaker by revenue, saw third-quarter net profits triple to their highest in a year-and-a-half on strong demand for its luxury Jaguar Land Rover vehicles and a one-time accounting gain.

British luxury carmaker JLR, which Tata Motors bought in 2008, has been propping up profits at its parent for the past two years. The unit sold a record 425,006 saloons and sports utility vehicles in 2013 in countries including Brazil, China, India and the United States.

The company beat forecasts and posted on Monday a 195 percent increase in net profit for the October-December quarter of 48.05 billion rupees, its highest quarterly profit since March 2012.

Tata's domestic operations posted a net profit of 12.5 billion rupees for the quarter, while profit from JLR more than doubled to 619 million pounds.

The domestic net profit was boosted by a 19.5 billion rupees gain the company made from selling its stake in its Korean subsidiary to its Singapore subsidiary. With the exception of the June quarter, the company's domestic unit had been stacking up losses since the third-quarter of 2012, according to Thomson Reuters data.

SALES SEEN SUBDUED

Tata Motors has been suffering at home as its passenger vehicles have fallen out of favour with consumers, who are struggling with high fuel costs and rising interest rates in a slowing economy. Sales of Tata trucks and buses have also plunged on the back of weak economic activity.

Chief Financial Officer C. Ramakrishnan said the slowing economy was expected to keep domestic sales weak, even after Tata Motors unveiled its first new models in four years last week in a bid to reverse the decline.

Rating agency Moody's, however, said the new vehicles' styling, features and petrol engines would help put Tata Motors in a much better position to compete with its rivals.

The vehicles' launch was part of a turnaround plan that investors fear may be delayed after the company's managing director Karl Slym, who was spearheading the revival, died in Bangkok in what police said may have been suicide.

The company has set up a panel, headed by Tata Sons Chairman Cyrus P. Mistry, to oversee its operations and strategy as an interim measure after Slym's death.

JLR has said it expects capital expenditure of about 3.5 billion pounds to 3.7 billion pounds in fiscal 2015 from an estimated 2.75 billion pounds in fiscal 2014, raising worries that the increased spend would hurt free cash flow.

Of the 51 Tata Motors analysts tracked by Thomson Reuters StarMine, 42 recommend the stock as they expect continued strong sales at JLR. The company's shares have has risen by a quarter over the last 12 months.

Operating margins at JLR stood at 17.9 percent, up 390 basis points from a year ago.

GRAPHIC-Tata Motor Q3 revenues link.reuters.com/maf76v

(Reporting by Aradhana Aravindan; Additional reporting by Patturaja Murugaboopathy in BANGALORE; Editing by Miral Fahmy)

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

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

GM Recall

GM Recall

GM recalls 717,950 vehicles in U.S., not for ignition switches  Full Article 

Hyundai Motor Results

Hyundai Motor Results

Hyundai Motor Q2 profit slips as firmer won, U.S. discounts hurt  Full Article 

Nokia Results

Nokia Results

Nokia raises networks outlook after Q2 profit beats estimates  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Breakingviews

Breakingviews

Apple winds up earnings hope for new gadgets  Full Article 

Reuters India Mobile

Reuters India Mobile

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