Tata Motors stock tanks on lower JLR margins
Mumbai: Shares of Tata Motors got battered Wednesday because of lower Jaguar Land Rover (JLR) margins even as the company posted over two-fold jump in consolidated net profit at Rs 6,234 crore for the quarter ending March 31.
The standalone numbers for Tata Motors India were disappointing with net profit sliding 1.4 percent to Rs 565 crore in the March quarter from Rs 573 crore a year ago.
The stock tanked as much as 8.73 percent on the BSE to an early low of Rs 251.80 and was the biggest drag on the BSE 30-share sensitive index Sensex.
On the National Stock Exchange, the stock fell to an early low of Rs 137.50, down by over 11.08 percent and was also biggest loser on the wide-based Nifty.
Experts said Tata Motors' March quarter earning were in line with market expectation, but JLR margin was lower than estimates resulting in the massive slide.
Besides, JLR profit was aided by a one-time income by way of deferred tax gains worth 217 million pounds or around Rs 1,888 crore during the quarter.
"In the March quarter the JLR models disappointed on the margins front. Margins in the quarter under review grew by over 14 percent, as against the market expectation of over 18 percent," Ashika Stock Brokers, Research Head, Paras Bothra said. The weak EBITDA margin was mainly driven by higher other expenses, he added.
"As per company, this was driven by an incremental cost of facilities for forthcoming launches under the aluminium platform for which revenue has not been booked so far, and move to third shift for some of the processes at the Halewood and Solihull plants to support increased demand," he added.
In the January-March period, JLR reported an over two- fold rise in net income at 696 million pounds (over Rs 6,000 crore) from 262 million pounds (over Rs 2,380 crore) from the same period last year.