Jaguar Land Rover Save The Day For Tata Motors, Yet Again

Tata Motors announced its Q4FY13 numbers post market hours on May 29, 2013. Tata Motors continued the trend it has been following since the last few quarters. Its standalone performance has been a major laggard while the performance of Jaguar Land Rover (JLR) has saved the day for Tata Motors.

It was evident from the sales volume figures for Q4FY13 and FY13 that the performance of Tata Motors is going to heavily weigh on its consolidated performance. In Q4FY13, the company saw a decline of 31.10% in total sales over Q4FY12. Major weakness came in from the sale of Passenger Vehicles which declined by 64.94% over the previous year. Sales of Commercial Vehicles and in export markets were down by 6.08% and 36.11% respectively.

On the other hand were sales of JLR, boosted by the success of models like Jaguar XF and Range Rover Evoque and geographies like China. In Q4FY13, JLR sales grew by 17.13% over Q4FY12. Jaguar sales were up by 30.97% while Land Rover sales were up by 14.57%.

This trend got reflected in the results of Tata Motors. In Q4FY13, while revenues from ‘Tata and other brands vehicles/spares and financing thereof’ declined by 26.72%, revenues from JLR grew by 29.61%. JLR contributed to more than 75% of total sales and hence, Tata Motors landed up with a 7.33% gain in revenues on a consolidated basis.

Its EBIT increased by 4.86% to Rs 5462.44 crore and its net profit declined by 39.01% to Rs 3811.85 crore. The decline in net profit came because in Q4FY12, net profit was boosted by a credit of GBP 225 million (Rs 1794 crore) for past income tax losses.

On a standalone basis, in Q4FY13, revenues of Tata Motors declined by 32.48% to Rs 11067.79 crore, on a yearly basis. It posted a loss at an operating level as well as on a net basis. Its EBIT declined by 122.74% with a loss of Rs 239.39 crore and its net declined by 155.22% with a loss of Rs 312.15 crore.

Clearly, the standalone performance of Tata Motors has been more than unimpressive. Its consolidated results have saved the day for Tata Motors and helped it perform better than street expectations.

It does seem like the domestic performance of Tata Motors will start bouncing back with an improvement in the Indian automobile industry. There has been a reversal in the trend followed by inflation and interest rates and consumer sentiment is likely to get better with time. Moreover, Tata Motors seems to have an aggressive revival plan in place for the CV and PV markets, concentrating on new launches.

Regardless, of the domestic performance, the fact is that more than 75% of Tata Motors consolidated revenues and more than 100% of its consolidated profits come from JLR. With a robust performance of JLR and bright prospects led by new launches and emerging geographies, the picture certainly looks bright for Tata Motors.