Tata Motors Ltd., India’s biggest automaker, posted third-quarter profit that beat analyst estimates as sales at its Jaguar Land Rover unit jumped.
Net income almost tripled to 48.1 billion rupees ($771 million) from 16.3 billion rupees a year ago, the Mumbai-based company said Monday. That exceeded the 35.1 billion-rupee median of 38 analyst estimates compiled by Bloomberg. Net sales rose 39 percent to 635.4 billion rupees, exceeding the 611.1 billion- rupee median of estimates.
Earnings were bolstered as profit at Jaguar Land Rover more than doubled to 619 million pounds ($1 billion), spurred by demand for the F-Type convertible and Range Rover SUVs. The luxury unit is helping buoy the company, which is struggling to revive profitability of its Indian business that sells Tata- brand cars, buses and trucks.
“We like JLR’s global luxury positioning and strong growth momentum,” Sorabh Talwar, an analyst at HDFC Securities Ltd., wrote in a Jan. 15 note to clients. “We believe JLR is in an investment-led growth phase, driven by strong demand traction across geographies and products.”
Tata Motors rose 1.1 percent to 364.05 rupees in Mumbai before the earnings were announced. The stock has declined 3.3 percent this year, compared with a 4 percent drop for the benchmark S&P BSE Sensex.
Sales at Jaguar Land Rover, the automaker’s main profit contributor, climbed 19 percent to a record 425,006 units in 2013, bolstered by the F-Type convertible that began shipping in May, the unit said last month.
Karl Slym, the Tata Motors managing director who headed the company except for Jaguar Land Rover, fell to his death last month. He was 51. The late executive had led efforts to revive profitability at the Indian business as it lost market share to Maruti Suzuki India Ltd. and the local unit of Seoul-based Hyundai Motor Co.
Tata’s domestic passenger vehicle deliveries fell 37 percent in the nine months through December, the most among automakers that report monthly sales to the Society of Indian Automobile Manufacturers. The company’s truck sales have dropped 25 percent in the same period.
The slowest pace of economic growth in a decade, rising fuel prices and interest rates combined with the fastest consumer inflation in a basket of 18 Asia-Pacific economies tracked by Bloomberg have reduced demand for passenger cars, Chief Financial Officer C. Ramakrishnan told reporters in Mumbai.
Demand will stay depressed for trucks and cars in the next financial year starting April 1, he said.
“We expect demand to remain stressed as it’s choppy times and tough to forecast,” said Ranjit Yadav, the president of the passenger vehicle business at Tata Motors. “We expect a tough few quarters ahead.”
The local business of Tata Motors reported a profit of 12.5 billion rupees versus a loss of 4.58 billion rupees a year ago after transferring an overseas unit to a holding company. Tata Motors will transfer its South African, Thai and Indonesian units to the same holding company by the end of March 31, according to Ramakrishnan.
Retail sales at Jaguar Land Rover climbed 19 percent to 309,535 units in the same period. Jaguar deliveries increased 47 percent to 56,491 units, while Land Rover sales rose 15 percent to 220,749 vehicles.
JLR is “cautiously optimistic” about growth continuing in the U.S. and overseas markets other than China, Chief Executive Officer Ralf Speth told reporters in Mumbai Monday.
Tata Motors’ two new small cars to be introduced this year, the Bolt hatchback and the Zest, an entry-level sedan, could help revive the automaker’s flagging sales, according to Moody’s Investors Service.
Together with a new petrol engine, the styling and features offered by the Bolt and Zest make the company much better placed to compete with peers such as Maruti Suzuki, Hyundai Motor and Mahindra & Mahindra, which have been eroding Tata Motors’ market share, Moody’s said Feb. 10.