The Tata Motors stock has followed up yesterday’s 4 per cent gain (on expectations of good fourth quarter results) with an almost 8 per cent rise today. The company announced the results late on Monday evening. Consolidated revenues grew by 19 per cent to Rs 80,684 crore over the three months ended March 2015, while consolidated net profits saw a three-fold rise to Rs 5,177 crore. Both the standalone India business and Jaguar Land Rover (JLR) contributed to the solid show.

 

JLR in top gear

 

Retail sales volumes at JLR witnessed about 28 per cent growth year-on-year during the quarter, thanks to the ramp-up in China volumes and the success of vehicles such as the new Jaguar XE, Jaguar XF, Jaguar XJ ( 2016 model year) and Discovery Sport introduced in the last one year. While the new XF was launched in China in December 2015, the 2016 model year XJ was introduced in February 2016.  Volumes grew in double digits across geographies, be it North America, China, the UK, Europe or the rest of the world.

JLR reported a 13 per cent growth in revenues, while net profits moved up by 56 per cent. Profit growth was also aided by the better performance of the Chinese joint venture for local production and an exceptional item related to insurance recoveries for the losses incurred at Tianjin port last year.

 

EBITDA margins for JLR came at 16.2 per cent, lower than the 17.4 per cent recorded a year ago. Despite good volume growth, a product mix with compact luxury cars such as the Jaguar XE, which are at lower price points and unfavourable forex movement for euro-denominated payables, depressed margins.

 

Going forward, the recently launched Jaguar F-PACE, the introduction of the XE in the US,  and upcoming vehicles such as the Evoque Convertible and the XFL from the Chinese joint venture are expected to keep the volume momentum going.

 

Upturn in domestic business

 

As regards the standalone business, even as volumes in the passenger car segment dropped due to the delay in the launch of the Tiago, the commercial vehicles segment more than made up. Improving infrastructure spends and demand for fleet replacement saw the company’s commercial vehicle volumes grow by 27 per cent year-on-year in the fourth quarter.  Thanks to this, the standalone business turned the corner, recording profits of Rs 465 crore compared with a loss of Rs 1,164 crore a year ago. EBITDA margins came in at 8.1 per cent against 2.8 per cent last year. The domestic business is expected to further strengthen in the coming months. 

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