Tata Motors Ltd. returned to profit after three quarters as sales at its luxury unit climbed and domestic passenger vehicle shipments rebounded amid festive push and preference for personal mobility during the pandemic.
Net profit of the homegrown automaker stood at Rs 2,941 crore in the quarter ended December compared with a net loss of Rs 314 crore in the preceding three months and a Rs 1,738-crore profit a year ago, according to an exchange filing. A consensus estimate of analysts tracked by Bloomberg had pegged the income at Rs 1,173 crore.
The automaker’s revenue rose 6% year-on-year to Rs 75,654 crore, against the Rs 76,659-crore forecast.
Earnings before interest, tax, depreciation and amortisation, too, increased 64% to Rs 12,131 crore.
Margin expanded to 16% from 10.3% a year ago.
The Mumbai-based company’s recovery follows an underperformance that began even before the pandemic struck, owing to a demand slowdown for Jaguar Land Rover in China—one of its fastest-growing markets—and the worst-ever sales slump in its home market. Tata Motors in December said it maintains its growth and profitability guidance. Sales at JLR rose 13.1% sequentially in the reported quarter to 1.28 lakh units. JLR sales in China rose 20.2% quarter on quarter and 19.1% from a year earlier.
Thierry Bollore, chief executive officer at JLR, in the statement said the luxury unit saw a strong sequential recovery in retails in all markets except the U.K. where Q3 remains seasonally lower. But the challenges continue for JLR, including Covid-19 impact on the global economy, the U.K.’s new trading relationship with the European Union and technology changes taking place in the automotive industry.
Back at home, the company ramped up production during the festival season to make up for the washout during the initial months of the lockdown. Also, its decision to hike prices from January may have prompted pre-buying in December. Tata Motors sold 1.50 lakh units in the domestic market in the reported quarter, up 24% from the year-ago quarter.
Due to a strong festive season and a preference for personal mobility, Tata Motors posted its highest sales in 33 quarters, according to its statement. It is also resolving supply chain issues and is ramping up output.
According to Guenter Butschek, chief executive officer and managing director at Tata Motors, the company improved its financials and operational performance by reducing costs and generating free cash flow, and is on track to achieve its target savings of Rs 6,000 crore.
Peer Maruti Suzuki India Ltd., the nation’s largest carmaker, too, saw its profit and revenue rise in the three months ended December.
Shares of Tata Motors closed 1.67% down before the results were announced compared with a 1.32% drop in the benchmark Nifty 50.