Jaguar owner Tata sees profit surges
A Jaguar XJ Ultimate is displayed during a news conference in Hong Kong. The most luxurious Jaguar sedan yet, it retails around $515,000. (May 24, 2012) Credit: AP
Tata Motors, India's biggest automaker, posted profit on Tuesday that beat analysts' estimates on demand for the Evoque compact sport utility vehicle made by its Jaguar Land Rover luxury unit and a one-time tax credit.
Net income more than doubled to a record 62.3 billion rupees ($1.1 billion) in the three months ended March 31, Mumbai-based Tata Motors said in a statement Tuesday. That compares with the 38.2 billion-rupee median of 40 analysts' estimates compiled by Bloomberg.
Sales at Jaguar Land Rover surged to a record in March as demand in China and Russia helped offset a slowdown in Europe. The unit's Chief Executive Officer Ralf Speth said the automaker has "waiting lists" for its products around the world making it "cautiously optimistic."
"Even if you normalize the tax credit, their net profit margins have shot up," said Deven Choksey, managing director at Mumbai-based K.R. Choksey Shares & Securities. "The results have been boosted by the strong performance of the Jaguar Land Rover brands."
Sales at the automaker rose to 506.1 billion rupees from 351.5 billion rupees, Tata Motors said. The company had a tax credit of 18.3 billion rupees in the quarter, compared with a 2.88 billion-rupee expense in the year-earlier period, according to the statement.
Tata fell 0.3 percent to 275.75 rupees in Mumbai Tuesday, before the announcement. The shares have climbed 54 percent this year, the biggest gainer on the 30-member benchmark BSE India Sensitive Index.
Tata Motors, which plans to invest 2 billion pounds ($3.1 billion) in Jaguar Land Rover this year, benefited from selling more of its luxury vehicles, according to Mahantesh Sabarad, an analyst at Fortune Equity Brokers India.
"We see strong volume growth going forward, especially from emerging markets such as Brazil, South Africa and India," said Sabarad. "However, the sentiment in Europe remains a concern."
The unit is planning to boost output after global sales surged 51 percent in March from a year earlier. The company said March 13 it would add 1,000 jobs and move to three-shift, 24- hour production at its Halewood plant in England to meet demand for models such as the Range Rover Evoque.
The Evoque SUV, which Tata Motors introduced last year, has a waiting list of about three months, Chirag Shah and Siddhartha Bera, analysts at Emkay Global Financial Services wrote in a note dated April 23.
Jaguar Land Rover in April posted its biggest month-on- month decline in sales since Tata Motors started reporting data in November 2009 amid slackening demand in China and as the company also battles stalling demand in Europe. Sales of the automaker in Europe may slow, according to a May 16 report by Hitesh Goel, an analyst at Kotak Securities in Mumbai.
"Nobody knows how deep, how long or whether anything will happen in Europe," Speth said at a news conference in Mumbai Tuesday. "We still see very strong demand for our vehicles in continental Europe."
Tata Motors in March announced it'll form a joint venture with China's Chery Automobile Co. to build luxury cars for the world's largest auto market. The venture, to be based in the eastern city of Changshu in Jiangsu province will have a production capacity of 130,000 vehicles annually, according to a statement posted on China's Ministry of Environmental Protection's website.
