Tata Motors

Tata Motors reported quite a poor show for Q1FY16, let down by poor sales of Jaguar and Land Rover (JLR). Its consolidated revenues (net of excise) was at Rs.61,020 crores for the quarter, down 6% (YoY). This was due to lower sales and weaker geographic mix at JLR, partially offset by strong revenue growth in standalone business on the back of continued M&HCV growth. The Consolidated Profit before tax for the quarter was Rs.4,359 crores, as compared to Rs.7,528 crores for the corresponding quarter of the previous year and the Consolidated Profit after tax (post minority interest and share of profit / (loss) of associates (net)) for the quarter was Rs.2,769 crores v/s Rs.5,398 crores, which has almost halved YoY.

On a standalone basis, total sales during the quarter (including exports) of commercial and passenger vehicles for the quarter, stood at 1,17,439 units, a growth of 6.2% (YoY). EBITDA showed a 5% growth but net profit was down 34% which was mainly on account of the lower other income of Rs.805 crore v/s Rs.1594 crore in Q1FY15. Its other income is usually profit on sale of investments in subsidiary companies and dividends from subsidiary companies.

In JLR, revenue was down 6.5% (YoY) at GBP 5002 million and net profit fell 29% at GBP 492 million. The financial performance in the quarter was lower than the strong corresponding quarter last year due to softer sales in China partially offset by strong performance in the UK, Europe and North America. Evoque sales were lower due to the ramp up of localized production in China and softer market conditions there. Jaguar sales volumes were down as the sales of XF and XJ fell ahead of the all new lightweight XF and the refreshed XJ 16MY, on sale in autumn this year, partially offset by the successful introduction of the new Jaguar XE.

The company is taking steps to resolve the situation in China by setting up a new management team but lowered overall sales targets and realigned 5-6% average price of Evoque. It would take a while for China to bounce back and looking ahead, expects stronger sales in all regions except China and Russia. It does have inventory buildup in China and the JLR inventory stands at around 8000-10000 units.