Tata Motors Sails High, Though Brexit Hits Q1 Profit
Tata Motors share price soared over 4 per cent on NSE today although the June quarter net profit more than halved to Rs.2,236 cr and missed Street expectations. India’s top automaker was the top Nifty50 gainer today.
Tata Motors by revenue said that its net profit more than halved to Rs.2,236 cr in the June quarter on account of forex losses and higher expenses. The company’s profit was hit by forex losses of Rs.2,296 cr mainly because of pound depreciation post-Brexit vote and adverse commodity derivatives impact of Rs. 167 cr. The majority of the forex loss was at JLR — Jaguar Land Rover, where profit after tax dipped to 304 million pounds as compared to 492 million pounds in the year ago quarter.
As a consequence, Jaguar Land Rover’s operating margins slumped to 12.3 per cent during the June quarter as compared to 16.4 per cent in the year ago quarter. Margins were also affected by lower local market incentives earned in China this quarter as compared to a year ago and an alteration in the product portfolio to encompass more high-volume-low-margin vehicles such as the Jaguar XE.
Meanwhile, Tata Motors share price is trading 4.35 per cent higher at Rs.525.65 on NSE. The stock opened at Rs.522.50 from a previous closing of Rs.503.75. As of now, a total of 89,62,732 shares have exchanged hands on the NSE counter. .
Most market analysts are viewing the company’s huge forex loss in the quarter as a one off case. The traders said that their focus is on JLR’s strong volumes and increasing business in India.Market experts said that EBITDA ( earnings before interest, taxes, depreciation and amortisation) adjusted for forex hit was ‘in line’. The consolidated revenues of Tata Motors edged up 9 per cent year-on-year (YoY) to Rs.65,900 cr on strong sales of its Jaguar XE compact saloon and Discovery Sport SUV.
Stock analysts stated that they are expecting strong volume growth to continue for Jaguar Land Rover (JLR) with XE available worldwide, gradual availability of the freshly launched F-Pace and Evoque Convertible across markets in FY17 and the launch of Jaguar XFL by the China JV.
Some analysts stated that Tata Motors had a strong product pipeline in JLR and India. They expected JLR margins to climb up to about 16 per cent over FY18–19.To acquire information on the financials, fundamentals and support and resistance levels of the stock, please visit Tata Motors share price history.