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Tata Motors Q4 earnings today: What to watch out for

LiveMint logoLiveMint 23-05-2017 Shally Seth Mohile

Mumbai: Tata Motors Ltd, the Tata group flagship, will report its fourth quarter earnings on Tuesday. It was a quarter marked by robust volume at the company’s UK subsidiary, Jaguar Land Rover Automotive Plc. The same, however, could not be said of Tata Motors’ India operations which took a hit in truck sales due to a switch to stricter emission norms. The company’s passenger car sales were a bright spot in an otherwise dull quarter. Albeit on a low base, it continued to expand helped by new model launches.

A Bloomberg poll of 23 analysts each for net sales and profit estimated the Mumbai-headquartered firm to report net sales of Rs78,797 crore and net profit of Rs2,575.9 crore.

Here are a few things to watch out for in the results.

JLR volumes: Driven by a strong volume across most of the markets, including the UK, the US, Europe and China, retail volumes (sales to customers) at the maker of Jaguar sedans and Land Rover sports utility vehicles rose 13% to 179,509 units in the three months to March over the year-ago period. While Europe at 43,263 units was the biggest contributor, the UK and the US were the second and third largest markets, respectively, by volume. The sales were led by new models such as the new Land Rover Discover launched in the March quarter and Jaguar F-Pace introduced last calendar year.

Margins: Led by a strong operating leverage, which comes on the back of robust volume, analysts expect JLR margins to be higher than 13%. This is even as JLR’s average selling price is likely to decline by around 1% quarter-on-quarter due to higher contribution of cheaper models in the overall sales.

India operations: It may turn out to be a lacklustre quarter for the maker of Tiago cars and Safari SUVs. Analysts expect the company to take a one-time hit of Rs200 crore because of the transition from Bharat Stage III to IV norms. This may prove to be a drag on margins for the standalone entity. Like other auto companies, Tata Motors was caught unaware by the Supreme Court’s April order, banning sales of vehicles with older emission technology with effect from 1 April. As a result, the company offered steep discounts to clear the inventory before the expiration of the last date. Also, unlike what it had expected, pre-buying ahead of the new norms was weak.

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