JLR, commercial vehicle drive Tata Motors' growth

Tata Motors reported stellar numbers for the March quarter, with 19 per cent year-on-year consolidated revenue growth at Rs 80,684 crore.

Strong sales growth of Jaguar Land Rover (JLR) across geographies and robust commercial vehicle in the domestic market drove the growth.

The company’s consolidated profit after tax for the quarter grew 201 per cent to Rs 5,177 crore, year-on-year.

The auto major’s stronger operating performance both in standalone as well as Jaguar Land Rover (JLR) business and lower net finance expenses were partly offset by higher depreciation and amortisation expenses, adverse revaluation of euro payables and one-time charges of Rs 1,580 crore.

This was because of an industry-wide recall in the US of potentially faulty airbags supplied by Takata, doubtful debts and previously capitalised investment in the JLR business.

For the financial year 2015-16, Tata Motors clocked consolidated revenues of Rs 2.75 lakh crore against Rs 2.63 lakh crore for the corresponding period last year. After exceptional items, consolidated profit after tax for the financial year was down 21 per cent to Rs 11,024 crore.

However, the year has been an eventful one for JLR and there have been a several exceptional items.

JLR put up an unexpectedly strong show during the quarter. JLR’s operating margin came in at 16.2 per cent in the March quarter against 14.4 per cent it reported in the December quarter. Analysts claim that the margins have rebounded due to the positive operating leverage and improving demand in China helped. JLR’s profit after tax jumped 56 per cent to £472 million during the March quarter. Revenues for the quarter rose 13.5 per cent year on year to to £6,594 million.

“We are investing £3.8 billion this year in new capacity addition, product development and meeting other engineering costs as far as JLR is concerned,” said Ralf Speth, chief executive, JLR.

The standalone business too reported healthy growth. Revenues grew by 17 per cent y-o-y to Rs 12,569 crore.

Sales growth was driven by a 26.6 per cent y-o-y spurt in volumes of medium and heavy commercial vehicles during the quarter on the back of the continued replacement demand, initial fleet expansion demand, infrastructure spending and better profitability of the freight operators.

Light commercial vehicles also reported a volume growth of 11.8 per cent y-o-y during the quarter. The standalone business Ebitda margin stood at 8.1 per cent against estimates of 6.7 per cent. Margins in the domestic business expanded as raw material costs declined 400 basis points sequentially. The operating income of the standalone business came in at Rs 1,021 crore, which again is well ahead of estimates.