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Tata Motors shares tank 10% post tepid JLR Q3 performance

The stock touched its 52-week low of Rs 357 in the opening trade. At 12:00 hours IST, the stock was trading at Rs 371.35 on BSE.

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Tata Motors shares tank 10% post tepid JLR Q3 performance

The share price of Tata Motors crashed upto 10 per cent a day after the auto major posted lower than expected Q3 earnings on account of tepid performance by its Jaguar Land Rover (JLR) business. Tata Motors on Monday posted over 11-fold increase in quarterly profit even as its cash-cow JLR showed lukewarm numbers due to the Brexit jitters and the diesel uncertainties across the continent.

The stock touched its 52-week low of Rs 357 in the opening trade. At 12:00 hours IST, the stock was trading at Rs 371.35 on BSE.

The company had reported loss of Rs 1,052.13 crore in the year-ago period and a net loss of Rs 295.30 crore in September quarter, the company said in an exchange filing.

Consolidated income rose 16.1 per cent to Rs 74,156 crore, the company said in a statement. On a standalone basis, Tata Motors India returned to the black with a net profit of Rs 183.65 crore on a revenue of Rs 16,102 crore, up 59 per cent.

Its cash-cow, the British marquee JLR, numbers printed lower with a pretax profit of 192 million pounds, down from 255 million pounds a year ago, which had included an USD 85 million insurance recovery. Revenue rose 4.3 per cent to 6.3 billion pounds. Had it not for this one-time gain, the bottomline would have been much lower.

The company attributed a slew of reasons for the poor show by JLR, which has been bailing out the group since 2010 quarter after quarter.

"China and overseas markets were up while Britain the US and European markets were lower reflecting more challenging conditions with cyclical weakness in Britain and the US, increasing diesel uncertainty in England and Europe, and the Brexit uncertainty in the home market," Tata Motors said.

"Lower JLR profit was due to the run-out of the 17 model year Range Rover and Range Rover Sport, higher depreciation and amortisation resulting from continued investment to drive profitable growth," JLR chief executive Ralf Speth said

Operating margins rose 80 bps at 10.9 per cent, while EBIT margin declined 130 bps to at 2.6 per cent.

Retail sales rose 3.5 per cent to 1,54,447 units driven by a good China show, wholesales rise 2.2 per cent to 1,33,739 units.

Total investment in new products, technology and capacity was over 1 billion pounds in the reporting quarter and is expected to exceed 4 billion pounds B for the full year, Speth said.

On a standalone basis, Tata Motors passenger and CV business did well. Revenue grew by 57.8 per cent year-on-year to Rs 16,101.6 crore, driven by strong volume growth.

Volume rose 29 per cent from 1,32,000 units, with commercial vehicle volumes showing an increase of 34.4 per cent and passenger vehicles 17.5 per cent.

While EBITDA margin soared by 750 bps to 9 per cent, EBIT margin rose higher by 980 bps to 3.4 per cent.

Tata Motors India will be investing Rs 1,021 crore in products, platforms and technologies this year.

N Chandrasekaran, group chairman despite tough market conditions, JLR continued its volume growth trajectory with strong response to its new product range. In a market that is facing significant disruptions, helping growth overall deliver a satisfying quarter of profitable growth.

On the domestic unit, he said "the turnaround strategy" is delivering results. Our focus on market share gain coupled with operational improvements is working well, with both commercial and passenger vehicles businesses delivering improved results.

"We will continue on this journey to drive growths ahead of the market, reduce our cost base and invest prudently to deliver better products and service for our customers and improved returns for our shareholders," he said.

Speth said, continued ramp up of the Velar and Discovery drove higher volumes, offset partially by run-out of the 17 model year Range Rover and Range Rover Sport.

The new Jaguar E-Pace, long wheelbase XE in China and 18 model year Range Rover and Range Rover Sport have been launched and will be ramping up in the March quarter.

China volumes jumped 14.6 per cent, which helped overall overseas volumes rise 18.2 per cent, lifting the total volumes up 3.5 per cent at 1,54,447 units.

"Increased sales in such markets reflected underlying demand for the new Range Rover Velar, the Land Rover Discovery, the recently-launched Jaguar E-Pace compact SUV and, in China, the long-wheelbase Jaguar XF.

"But this was offset by flatter demand in the US, Britain and the mainland Europe, and the impact of model year changeovers for the Range Rover and Range Rover Sport.

Speth further said, "this is a milestone year for JLR as we prepare to launch our first ever-electric car, the Jaguar I-Pace, and Range Rover plug-in hybrids."

On the domestic numbers, MD & CEO Guenter Butschek said, overall volume grew 31 per cent to 1,72,952 units with broad based growth across the portfolio.

While M&HCV trucks rose 54 per cent, ILCV trucks were up 49 per cent, SCV & pick-ups rose 44 per cent, CV passenger carriers up 15 per cent, and PV up 22 per cent.

"The performance in the quarter reflects the progress of the turnaround strategy which involves focused actions on filling up portfolio gaps, rigorous cost reduction and creating a robust extended supply chain footprint," he said.

At the group level, it had net debt of Rs 47,777 crore up from Rs 27,485 crore in March 2017, reflecting negative free cash flow at JLR with continued high investments and unfavourable working capital related to new model launches.

with PTI inputs

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