Tata Mo­tors In­dia Q1 con­sol­i­dated net profit falls 49pc

The Pak Banker - - COMPANIES/BOSS -

MUM­BAI: Tata Mo­tors Ltd, In­dia's largest au­to­mo­bile maker by rev­enue, on Fri­day re­ported a 49% drop in first- quar­ter net profit as sales at its UK lux­ury car unit Jaguar Land Rover (JLR) Automotive Plc de­clined as de­mand weak­ened in China, its largest mar­ket.

Net profit fell to Rs.2,769 crore in the three months to June from Rs.5,398 crore in the year-ago quar­ter. Net sales de­clined 6.2% to Rs.61,020 crore from Rs.64,683 crore in the same quar­ter last year.

The com­pany's profit and rev­enue fell short of ex­pec­ta­tions. The com­pany had been ex­pected to post a profit of Rs.3,238 crore on sales of Rs.64,359.5 crore, based on the find­ings of Bloomberg an­a­lyst sur­veys.

The JLR unit's rev­enue for the quar­ter fell 6.6% at £5 bil­lion from £5.35 bil­lion in the year-ago last year be­cause of lower sales in China, where de­mand for lux­ury cars has dropped as eco­nomic growth slows. JLR's net profit fell 29% to £492 mil­lion from £693 mil­lion in the same pe­riod.

Mean­while, the com­pany's In­dian oper­a­tions showed signs of re­cov­ery in terms of sales. Net sales jumped 20% to Rs. 9,197.62 crore in the three months to June. Net profit, how­ever, de­clined to Rs. 257.57 crore from Rs. 393.65 in the same quar­ter last year. The com­pany's com­mer­cial ve­hi­cles sales were boosted by heavy duty truck sales, while new model launches in the pas­sen­ger ve­hi­cle seg­ment, such as the Zest, Bolt and Nano GenX, pushed up pas­sen­ger ve­hi­cle sales. Tata Mo­tors stock has dropped 30% since its March 2015 peak, a re­ver­sal marked by fears around China, wrote an­a­lysts Chi­rag Shah and Sid­dharth Bera of Edel­weiss Se­cu­ri­ties In­dia Ltd in a 3 Au­gust re­port.

"We be­lieve that Street is al­ready fac­tor­ing in a worst case sce­nario for JLR. While we agree that there is a like­li­hood of down­grade in prof­its from China, we do not ex­pect it to be more than 50% (for op­er­at­ing profit), in a worst case sce­nario," they wrote. On Fri­day, Tata Mo­tors shares closed at Rs.392.55 per share, up 2.5%. The bench­mark BSE Sen­sex closed at 28,236, down 0.22%. The earn­ings were re­leased af­ter mar­kets hours on Fri­day.

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