JLR profits down despite sales growth

Tata Motors Ltd is now trading at Rs 443, up by Rs 6.45 or 1.48% from its previous closing of Rs 436.55 on the BSE.

Jaguar Land Rover, which is owned by Tata Motors, is the largest vehicle manufacturer in the United Kingdom, contributes heavily to the company's bottomline. The benchmark BSE Sensex was flat at 28,336.64 points despite Tata Motors and Tata Motors DVR pulling it down, with Adani Ports, ITC and ONGC providing it some support.

Tata Motors on Tuesday reported 96.20 per cent year-on-year fall in consolidated net profit at Rs 112 crore for the December quarter. Although sales were 13 per cent better at £6.5 billion, profit margins fell from 14.4 per cent... Its actual Oct-Dec net profit was minuscule compared to the Reuters' analyst poll estimate of Rs 2,248 crore, and ET Now poll estimate of Rs 2,635 crore.

Pre-tax profit for the for the first nine months of the 2016-2017 financial year was £934 million, down slightly from the £980m in the nine months of the previous year.

JLR earnings were the major drag on consolidated results.

Tata Motors said the invalidation of high-value banknotes by Prime Minister Narendra Modi on 8 November hurt its domestic commercial vehicles business, a cash cow, with sales of trucks and buses declining 9%.

Tata Motors said standalone revenues and profit were hit by de-growth in the medium and heavy vehicle (M&HCV) segment and flat LCV segment partially offset growth in the auto segment.

On a standalone basis, the company said net loss widened to Rs1,046 crore in the December quarter from Rs137 crore a year ago.

Indian shares fell on Wednesday, with Tata Motors (TAMO.NS) and Sun Pharmaceutical Industries (SUN.NS) weighing on the indexes after posting disappointing results.

Its overseas business, Jaguar Land Rover (JLR) were hit by operational weakness and huge foreign exchange losses, according to the company. "While we continue to like JLR's strong product pipeline and volume growth story, we believe this will take a back seat until visibility on JLR's margins improves", CLSA said in a note to its investors.

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