Tata Motors falls 12% on JLR margins

Shares of Tata Motors got battered on Wednesday falling nearly 12 per cent as investors were disappointed on lower Jaguar Land Rover margins even as the company posted an over two-fold jump in consolidated profits.

Shares of the company settled at Rs 243.35, down 11.80 per cent on the BSE on Wednesday, eroding a whopping Rs 7,616 crore from its market capitalisation (m-cap) in a single trading session. Intra-day, the stock had slumped 12.35 per cent to Rs 241.80.

At the end of the day, the market cap of Tata Motors, which was the biggest drag on the BSE 30-share Sensex stood at Rs 65,497 crore, down from its Rs 73,113 crore on Tuesday.

Experts said while Tata Motors' March quarter earnings were in line with market expectations but JLR margins were lower than estimates resulting in the massive slide in shares.

"In the March quarter, the JLR models disappointed on the margins front. Margins in the quarter under review grew by over 14 per cent, as against the market expectation of over 18 per cent," Ashika Stock Brokers, Research Head, Paras Bothra said.

The weak EBITDA (Earnings before interest, taxes, depreciation and amortisation) margin was mainly driven by higher other expenses, he added.

Unicon Financial Solutions CEO Gajendra Nagpal said "the domestic market scenario for Tata Motors was not good. JLR was the only hope, and since there was margins pressure on the JLR front as well, hence the market was worried."

In the January-March period, JLR reported an over two-fold rise in net income at 696 million pounds (over Rs 6,000 crore) from 262 million pounds (over Rs 2,380 crore) from the same period last year.

Besides, JLR profit was aided by a one-time income by way of deferred tax gains worth 217 million pounds or around Rs 1,888 crore during the quarter.

Meanwhile, the standalone numbers for Tata Motors India were also disappointing, according to experts, with net profit sliding 1.4 per cent to Rs 565 crore in the March quarter from Rs 573 crore a year ago.

Nagpal further added that there is a looming fear that the excise duty on diesel vehicles are likely to go up and that also is adding pressure on the stock.