The FINANCIAL — Tata Motors Ltd., India’s largest truckmaker, reported second-quarter net income more than doubled due to lower input prices and a recovery in demand.
Profit totaled 7.29 billion rupees ($156 million) in the three months ended in September, compared with 3.47 billion rupees a year earlier, Mumbai-based Tata Motors said in a statement today, according to Bloomberg. That exceeded the 4.32 billion rupee median profit estimate in a Bloomberg survey of nine analysts.
Tata said its market share in passenger cars in India was 11.6%. It added that it had commenced delivery of the Tata Nano, the world's cheapest car, BBC reported. Sales in the quarter were 79.24bn rupees, up from 70.3bn in the same quarter last year. Tata said it had delivered 7,506 Nanos so far, made at its factory in Uttarakhand, a state in northern India.
Tata abandoned plans to build the cars in the state of West Bengal due to a row over land acquired from farmers, the same source reported. The cheap car is currently being made in factories Tata already has running. The "mother plant" for the Nano is being built in the western state of Gujarat and Tata has said it will eventually make 500,000 Nanos a year. The Nano costs 100,000 rupees, or about £1,300.
Tata Motors, which owns the luxury Jaguar and Land Rover brands, said its margins had gone to 13.4 percent, up 580 basis points from a year ago, Reuters informs. After a dismal 2008/09, sales of vehicles are picking up again in India with lower interest rates and improved consumer sentiment. Industry-wide sales are expected to grow by double-digits in the year to end March — one of the few bright spots in a global industry struggling to emerge from its worst ever downturn.
Tata Motors has seen slower growth in car sales in half-year to September compared to leading car maker Maruti Suzuki (MRTI.BO) and the Indian unit of South Korea's Hyundai Motors (005380.KS), according to the same source. However, Tata is expecting sales to pick up with its recently launched Manza sedan, which will replace the basic version of the premium Indigo.
American depository receipt of Tata Motors climbed the most in a month after profit beat estimates. They were up 74 cents, or 6.5 percent, to $12.19 at 9:54 a.m. in New York, Bloomberg reported. In Mumbai trading, the shares rose 1.9 percent to close at 539.4 rupees. The stock has more than tripled since the beginning of this year and is the best performer in the 30-stock Sensitive Index of the Bombay Stock Exchange. The earnings were detailed after the stock market closed for trading.
Tata Motors sold 158,575 commercial and passenger vehicles in India and overseas in the quarter, 17 percent more than a year earlier, according to the statement. Commercial vehicle sales rose 21 percent to 89,655 units while passenger vehicle sales increased 27 percent, it said, the same source wrote. Profit was also lifted by a change in accounting policy by the government regarding the valuation of foreign exchange loans. The change, which took effect March 31, helped Tata Motors to cut the notional exchange loss on overseas loans during the quarter to 153.1 million rupees compared with 2.45 billion rupees in the year-ago quarter, the statement said.
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