News Analysis

Strong show by JLR fails to fuel Tata Motors performance

Parvatha Vardhini C BL Research Bureau | Updated on January 11, 2018 Published on May 23, 2017


With the India business making a loss of ₹829 crore, consolidated profit dropped by 16 per cent to ₹4,336 crore. Like in the many preceding quarters, the domestic performance was impacted by a poor show by commercial vehicles.

Weak volumes due to the run out of 2016 models, unfavourable currency movements and high marketing expenses saw the Jaguar Land Rover (JLR) business posting tepid numbers in the December 2016 quarter.

But JLR has gained back its colour in the quarter ended March 2017.

Led by the new Discovery Sport, the Jaguar F-PACE and the XE, JLR posted double digit growth in sales volumes across the UK, the US, China and Europe.

Net revenues for the JLR business rose 10 per cent year-on-year to £7,268 million (approximately ₹61,000 crore) and net profit by 18 per cent to £557 million (around ₹4,700 crore).

EBITDA margins came in at 14.5 per cent.

Although lower than the 16.2 per cent recorded in the same quarter last year, JLR posted the best-ever margins for this fiscal in the March 2017 quarter. EBITDA margins for the first three quarters of 2016-17 was in the range of 9.3-14 per cent.

This strong show by JLR though was not enough to lift the consolidated numbers. The lacklustre numbers of the domestic standalone business impacted consolidated profit.

With the India business making a loss of ₹829 crore, consolidated profit dropped by 16 per cent to ₹4,336 crore. Like in the many preceding quarters, the domestic performance was impacted by a poor show by commercial vehicles (CVs). The fact that the company, like many others, had to offer discounts on its BS-III stock in end March compounded its bad luck.

Domestic CV volumes dropped by 4.5 per cent year-on-year in this quarter, but passenger vehicle volumes moved up by 41 per cent, driven by recent launches such as the Tiago and the Tigor.

Into 2017-18, CV sales have hit a lull in April after the introduction of BS-IV norms. But in the months to come, a further pick up in infrastructure spends, a normal monsoon and the roll out of the GST will be positives for the heavy truck industry. On light CVs and buses, the company expects 10 per cent volume growth in 2017-18. The good run may continue on the domestic passenger car front, with the Nexon (compact SUV) expected soon.

At JLR, the ramp-up of the Land Rover Discovery, and upcoming products such as the Range Rover Velar and XF Sportbrake are expected to drive growth.

Published on May 23, 2017

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