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Tata Motors Shares Fall as Jaguar Earnings Miss Estimates

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May 30 (Bloomberg) -- Tata Motors Ltd., India’s biggest automaker, declined the most in three years in Mumbai trading, after its main Jaguar Land Rover unit posted earnings that missed some analysts’ estimates.

Tata Motors fell 12 percent to 243.05 rupees at the close, the most since April 2009. It was the biggest loser on the 30-member BSE India Sensitive Index, which dropped 0.8 percent.

The results damped optimism over Jaguar, which had helped Tata Motors become the third-best performer this year among the world’s biggest carmakers, and prompted Standard Chartered Plc to cut its investment rating on the stock to the equivalent of hold. Jaguar’s fourth-quarter earnings before interest, taxes, depreciation and amortization of 605.4 million pounds ($945 million), missed estimates at Deutsche Bank AG and Nomura Holdings Inc.

“Many analysts were upbeat about the huge volumes, especially in China, and therefore expected a big increase in margins,” said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India Ltd. The shares are responding to the lower margins, he said.

Jaguar Land Rover Ebitda margins narrowed to 14.6 percent in the quarter ended March 31, from 17 percent in the three months ended Dec. 31, according to investor presentations on the Mumbai-based company’s website.

Slack Demand

When a gain booked for deferred tax assets is stripped out, profit would be 422 million pounds, Kapil Singh, a Mumbai-based analyst with Nomura, wrote in a report. That missed the brokerage’s estimate by about 16 percent.

Tata Motor’s decline today in Mumbai reduced its market capitalization by 94.7 billion rupees ($1.7 billion) to 714.7 billion rupees, according to data compiled by Bloomberg.

Jaguar Land Rover in April posted its biggest month-on-month decline in sales since Tata Motors started reporting data in November 2009 amid slackening demand in China and Europe.

“Nobody knows how deep, how long or whether anything will happen in Europe,” Jaguar Chief Executive Officer Ralf Speth said at a news conference in Mumbai yesterday. “We still see very strong demand for our vehicles in continental Europe.”

Tata has jumped 36 percent this year in Mumbai trading, making it the best performer on the BSE India Sensitive Index.

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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