Jaguar Land Rover (JLR), UK-based subsidiary of Tata Motors, posted an operating profit of Rs 325.27 crore for the quarter ended September, thanks to a 23% sequential growth in wholesale volume and aggressive cost cutting. Volume growth was driven by a 33.7% increase in Land Rover sales riding on demand for New Land Rover models. Sales of Jaguar though grew just 1.7% over the June quarter.
The operating performance notwithstanding, JLR’s cash losses stood at £170 million. The company also raised additional debt of £258 million during the quarter. What’s more, despite many new product launches, retail volumes have been flat in the last three quarters. Analysts maintain that given the high fixed costs, JLR’s numbers are extremely sensitive to volume assumptions.
On a consolidated basis, Tata Motors posted a consolidated net profit of Rs 21.78 crore for the September quarter, as against a net loss of Rs 941.75 crore in the same period last year. Profitability at the net level was helped by investment gains worth Rs 19.69 crore and strong sales volume growth at JLR.
Total operating revenues declined 8.2% year on year to Rs 21,100.22 crore. Though Tata Motors’ automotive segment revenues increased 19.9%, JLR revenues dropped 21.5%. Operating profit margins expanded by 100 basis points or one percentage point year on year to 7.1%. Operating performance was helped by a decline raw material costs and other expenditure. A decline in steel prices over the past year may have helped margins, too. As a result, operating profit increased 7.1% to Rs 1,505.87 crore.
Tata Motors’ net automotive debt increased to Rs 24,200 crore at the end of September from Rs 21,900 crore at the end of June. The Rs 3,500 crore proceeds from GDR and FCCB issues helped debt levels to decline to Rs 22700 crore since September.
Most of the positive news seems to be factored in the share price, at Rs 700.75 apiece currently. Near-term appreciation looks limited and hence investors could book profits at these levels.
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