Tata Motors' shares surge over 3% despite 57% drop in Q1 net profit

Tata Motors' consolidated net profit dropped 57% for the quarter ending on June 30. The company posted a net profit of Rs 2236 crore as against Rs 5231 crore for the quarter ending on June 30, 2015.

On Standalone basis, the company posted a net profit of Rs 25.75 crore for the June 2016 quarter as compared to Rs 289.84 crore for the June 2015 quarter.

At 1514 hours, the shares of the company were trading at Rs 510.50 per piece, up 3.39%, or Rs 16.75 on BSE.

The company registered consolidated revenues of Rs 67,056 crore in Q1FY17 as compared to Rs 61,510 crore in Q1FY16. Giving the reason for the rise in revenues, the company said, "In Jaguar Land Rover business-Strong sales in all the regions- UK, Europe, North America, China and other Overseas markets, and in Standalone business-Continued volume growth in M&HCV segment and the LCV segment".

On Standalone basis, the total income increased from Rs 11,307.5 crore in June, 2015 to Rs 12089.2 crore in June 2016. Operating profit (EBITDA) of the Standalone business for the quarter stood at Rs 588 crores with operating margin at 5.7% (margin calculated on revenue net of excise duty), the company said in a regulatory filing.

"Consolidated Profit before tax (before exceptional item) for the quarter was Rs 2,066 crores, against Rs 6,340 crores for the corresponding quarter last year broadly due to higher volumes in both standalone as well as Jaguar Land Rover business more than offset by the adverse FX impact of Rs 2,296 crores and adverse commodity derivatives impact of Rs 167 crores in the Operating profit mainly in the Jaguar Land Rover business, lower local market incentive in the Jaguar Land Rover business as compared to the corresponding quarter last year and higher depreciation and amortization expenses as compared to the corresponding quarter last year", the company said. 

The impact on the Pound following BREXIT vote was also on of the reasons for an impact on Jaguar's profits.

"The operating performance in the quarter reflects the overall higher wholesales, offset by adverse FX impact of £207 million including revaluation of £84 million, mainly EUR payables resulting from depreciation in the Pound following the BREXIT vote. EBITDA margin excluding the FX revaluation was around 14%. Further, the operating profit for the quarter was also impacted by lower local market incentive as compared to the corresponding quarter of the last year," said the company.

For the quarter, Jaguar Land Rover wholesales and retails (both excluding China JV) were 1,20,776 units and 1,18,704 units respectively. China JV wholesales and retails for the quarter were 13,558 units and 14,059 units.