A sharp rise in sales of Jaguar Land Rover (JLR) vehicles ensured an over 3-fold jump in consolidated net profit of Tata Motors at Rs. 5,398.21 crore for the first quarter ended June from Rs. 1,726.07 crore a year ago.
The company beat analyst expectations of a net profit of Rs. 3,700 crore.
Revenues at the two British marquee brands grew nearly 54% to Rs. 54,425.97 crore, enough to more than offset the 15.3% decline in revenues of the company’s standalone operations. The firm’s consolidated revenue stood at Rs. 64,683 crore during the quarter, up 38.2% over Rs. 46,796 crore in the year-ago period.
JLR also raked in bulk of the profits with the subsidiary operating at a margin of 20.3%, while margins at the company’s Indian business was a negative 2.8%. On a standalone basis, Tata Motors’ net profit declined by 44% to Rs. 393.65 crore.
JLR’s performance was aided by a strong surge in demand for its SUVs and luxury sedans in China, the world’s biggest automobile market. The two firms reported a cumulative increase of 22% in retail sales at 115,596 units. In contrast, Tata Motors registered a 28% fall in sales of trucks, buses and passenger vehicles in India during the period.
Analysts said they underestimated the profitability of Jaguar Land Rover in a big way.
“We have a strong understanding of Tata’s domestic business but follow our intuition when it comes to JLR,” said an analyst with a prominent brokerage firm. “Clearly, JLR is in a sweet spot and its cars are being lapped up across geographies. We will need to look at them more closely in future.”
The company’s shares rose 3.3% to Rs. 447 on the BSE.