Tata Motors Profit Beats Estimates as Jaguar Sales Climb

Tata Motors Ltd. (TTMT), India’s biggest automaker, posted profit that beat analyst estimates as increased sales at its Jaguar Land Rover Ltd. luxury unit offset losses at home.

Fourth-quarter net income fell 37 percent to 39.5 billion rupees ($704 million), the Mumbai-based company said. That beat the 26.7 billion-rupee median of 41 analysts’ estimates compiled by Bloomberg. Profit at the luxury unit was 378 million pounds ($572 million), surpassing the 365 million-pound median estimate of eight analysts surveyed by Bloomberg News.

Deliveries at the luxury unit, which Tata Motors bought from Ford Motor Co. in 2008, increased 19 percent to 116,340 vehicles in the three months ended March 31. In comparison, sales at the local business plummeted 29 percent to 184,942 units, as customers in India held off purchases on expensive loans and slowing economic growth.

“As far as Jaguar Land Rover is concerned, they are going to gain from a depreciation in the pound,” Umesh Karne, an analyst at Brics Securities Ltd. in Mumbai, said before the results announcement. “Raw material prices are softening and the margins at JLR will improve as models such as the new Range Rover and F-Type improve the model mix.”

Tata Motors rose as much as 5 percent, and changed hands at 312.20 rupees, or 2.8 percent higher, as of 9:24 a.m. in Mumbai trading. The shares had dropped 2.8 percent this year as of yesterday, compared with the benchmark S&P BSE Sensex’s 3.7 percent advance in the same period.

Product Mix

Models such as the Jaguar XF, Land Rover Freelander and the best-selling Evoque accounted for more than 50 percent of the luxury unit’s sales in the quarter, according to company data. These models had an average selling price of about 30,000 pounds compared with the 42,000-pound average for its other models, Vijay Somaiya, head of treasury at Tata Motors, said in a briefing on Jan. 24.

Jaguar accounted for 21,163 units of the luxury unit’s deliveries last quarter and Land Rover for 95,177 vehicles, according to company data.

Sales of Jaguar Land Rover rose 22 percent to 5.05 billion pounds, according to the statement. That beat the 4.72 billion-pound median estimate of eight analysts surveyed.

The luxury unit based in Gaydon, England plans to introduce eight new or refreshed models this year, Jaguar Land Rover Chief Executive Officer Ralf Speth said yesterday.

F-Type

The automaker began deliveries of its two-seat F-Type model, that starts from $69,000, this month. Jaguar expects the U.S. to be the largest market for the model, accounting for almost half its sales, it said May 9.

The company is also working on a diesel hybrid Range Rover model, Chief Financial Officer C. Ramakrishnan said yesterday. The automaker aims to maintain the luxury unit’s earnings margin before interest, tax, depreciation and amortization at 14 percent to 15 percent, he said.

Net sales at Tata Motors, including units, increased 10 percent to 558.4 billion rupees in the three months ended March, according to the statement. That surpassed the 518 billion-rupee median of 39 analysts’ estimates.

“Strong demand, growth in volumes, favorable market mix and favorable operating foreign exchange at Jaguar Land Rover” offset the standalone business’s performance, Tata Motors said in the statement. Foreign exchange gains amounted to 837.1 million rupees in the quarter, compared with 61.8 million rupees a year earlier.

Emerging Markets

Jaguar Land Rover is turning to emerging markets such as China, Russia and South Africa to pursue growth. Global retail sales in the year ended March 31 rose 23 percent to 374,669 vehicles, with those in China surging 73 percent to 77,075 units, according to company data. China was the company’s largest market, it said in January.

“I expect China to continue to grow,” Speth said yesterday. “The new government will find ways to boost the economic growth and the automotive market will come up, and I expect the luxury car market to grow faster.”

The luxury unit, together with Chery Automobile Co., is investing 10.9 billion yuan ($1.78 billion) to build a manufacturing plant in eastern China. The venture will include a local brand as well as a research & development center and an engine plant.

Jaguar Land Rover is also studying the feasibility for a plant in Saudi Arabia, it said in December. The luxury unit said last year it is expanding Jaguar Land Rover assembly at the company’s factory in Pune, located in the western state of Maharashtra in India.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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