Q2 Results: Tata Motors’ Loss Narrows, Plans To Raise Rs 10,000 Crore
Tata Motors’ net loss reduced to Rs 216.50 crore year-on-year in the September quarter.
Tata Motors Ltd.’s quarterly loss was lesser than analysts’ estimates as its luxury car unit showed signs of improvement. The automaker also approved a plan to raise capital to the tune of Rs 10,000 crore to pare debt.
Net loss narrowed to Rs 216.50 crore in the quarter ended September from Rs 1,049 crore, the automaker said in an exchange filing. That compares with the Rs 1,635-crore consensus estimate of analysts tracked by Bloomberg.
- Revenue fell 9.1 percent over last year to Rs 65,432 crore.
- Operating profit rose 15 percent to Rs 7,046 crore.
- Margin expanded 230 basis points to 10.8 percent.
- JLR’s margin at 13-quarter high of 13.8 percent.
- JLR doesn’t require any capital infusion at the moment.
The company’s board approved fund raising through debt and equity, the filing said, adding the company would make a preferential issue of equity shares and warrants worth Rs 6,500 crore to holding company Tata Sons. The group’s voting rights in Tata Motors would increase to 45.71 percent after the exercise. “The company will use proceeds from the preferential issue to promoters to retire domestic debt,” PB Balaji, group chief financial officer, told BloombergQuint.
That comes as the total number vehicles sold by the automaker in India fell 45 percent to 94,454 units while commercial vehicle sales declined 42 percent in the same period. Automakers in the country have faced headwinds due to a credit crunch since the IL&FS crisis last year and the emergence of second-hand vehicles as a viable option for buyers.
Sales of Jaguar Land Rover—which contributes the most to Tata Motors’ profit—improved this quarter and delivered a well-rounded performance, the company said in a statement accompanying the earnings. Also, Project Charge- the firm’s cost-cutting program for JLR, has delivered £2.2 billion so far, the filing said.
Definitely, it’s a big surprise. In fact, JLR’s operating margin metrics is above our expectations. This comes in an environment where the overall luxury market globally is undergoing a challenging period.Mitul Shah, analyst at Reliance Securities.
The expectation of pre-buying before migration to Bharat Stage-VI emission norms may not materialise as anticipated, brokerage Maybank Kim Eng said in a research note prior to the earnings. Also, the price increase due to migration may force customers to delay purchases of trucks until full economic recovery, it said.
Shares of Tata Motors fell 5 percent ahead of the earnings announcement compared with NSE Nifty Index, which remained largely unchanged.
