Tata Motors Net Beats Estimate on Accounting Change
July 27 (Bloomberg) -- Tata Motors Ltd., the Indian truckmaker that owns Jaguar and Land Rover, unexpectedly reported a jump in profit after a change in accounting rules and lower commodity prices helped mask a fall in demand.
Net income rose 58 percent to 5.14 billion rupees ($107 million) in the three months ended June, Mumbai-based Tata Motors said in a statement today. That exceeded the 994 million rupees median estimate in a Bloomberg survey of nine analysts. The earnings don't include the Jaguar and Land Rover luxury units, which Tata bought last year.
Spending on raw materials, Tata Motors's biggest expenditure, fell 24 percent in the last quarter as commodity prices eased. The $2.5 billion acquisition of the U.K.-based luxury units pushed the company to its first consolidated loss in at least seven years. Chairman Ratan Tata introduced the Nano, the world's cheapest car, this month to spur sales.
"There are signs of a possible recovery," said Sapna Jhaveri, a Mumbai-based analyst at K.R. Choksey Shares and Securities Pvt., who has a 'buy' rating on Tata Motors. "The volumes from Nano will kick in from the second half of this year. The government's spending on infrastructure will also help the commercial vehicles."
Tata Motors rose 0.3 percent to close at 374.1 rupees in Mumbai trading, after falling as much as 4.4 percent. The stock has more than doubled this year.
Rule Change
The company's notional exchange loss during the quarter declined to 55.4 million rupees compared with 1.62 billion rupees a year earlier, according to the statement. That was because of a change in accounting rules by the government, which in March allowed companies to alter provisions for mark-to- market losses on foreign currency loans.
Spending on raw materials declined to 38 billion rupees, the company said. Benchmark hot-rolled steel averaged 26,000 rupees a metric ton in the quarter, compared with 40,000 rupees a year earlier, according to Niraj Shah, an analyst at Centrum Broking Pvt. in Mumbai.
Operating profit in the last quarter improved to 4.88 billion rupees from 3.03 billion rupees a year earlier.
"The first quarter has shown signs of improvement," Chief Financial Officer C. Ramakrishnan told reporters in Mumbai. "The availability of finance has considerably eased now."
Tata Motors sold its stake in Tata Steel to pay $150 million of debt used to purchase Jaguar and Land Rover, Ramakrishnan said. Income from businesses other than manufacturing gained 1 percent to 3.19 billion rupees, according to the statement.
That masked a 4.3 percent slump in vehicle sales in the quarter as freight operators bought fewer heavy trucks and a weaker economy damped car demand. Total sales fell to 127,340 from 133,079, the company said.
'More Pain'
"There could be some more pain left for commercial vehicle manufacturers," said Viswanathan Vasudevan, who helps manage about $250 million at Aquarius Investment Advisors Pte. in Singapore. "The economy can't turn around in just six months. When it comes to big spending, everybody is still cautious."
India's $1.2 trillion economy grew 5.8 percent in the quarter ended March, compared with an average of about 9 percent between 2004 and 2009. Prime Minister Manmohan Singh's government is boosting spending to speed up growth.
"Infrastructure spending is very crucial for the recovery in commercial-vehicle sales," said Gopal Agrawal, head of equities at Mirae Asset India Investment Co. in Mumbai. "It will take another five to six months to see an uptrend."
Tata Motors started selling the world's cheapest car, the Nano, this month. It selected the first 100,000 owners through a lottery from the 206,703 orders it got for the car during the initial sales period in April.
The first Nanos are being built at a plant in Pantnagar, northern India, which can produce 60,000 units a year. Annual output will increase by a further 350,000 when a facility in Sanand, western India, is completed at the end of this year. The cheapest version of the Nano retails for 123,360 rupees in New Delhi.
To contact the reporter on this story: Vipin V. Nair in Mumbai at vnair12@bloomberg.net .
July 27 (Bloomberg) -- Tata Motors Ltd., the Indian truckmaker that owns Jaguar and Land Rover, unexpectedly reported a jump in profit after a change in accounting rules and lower commodity prices helped mask a fall in demand.
Net income rose 58 percent to 5.14 billion rupees ($107 million) in the three months ended June, Mumbai-based Tata Motors said in a statement today. That exceeded the 994 million rupees median estimate in a Bloomberg survey of nine analysts. The earnings don't include the Jaguar and Land Rover luxury units, which Tata bought last year.
Spending on raw materials, Tata Motors's biggest expenditure, fell 24 percent in the last quarter as commodity prices eased. The $2.5 billion acquisition of the U.K.-based luxury units pushed the company to its first consolidated loss in at least seven years. Chairman Ratan Tata introduced the Nano, the world's cheapest car, this month to spur sales.
"There are signs of a possible recovery," said Sapna Jhaveri, a Mumbai-based analyst at K.R. Choksey Shares and Securities Pvt., who has a 'buy' rating on Tata Motors. "The volumes from Nano will kick in from the second half of this year. The government's spending on infrastructure will also help the commercial vehicles."
Tata Motors rose 0.3 percent to close at 374.1 rupees in Mumbai trading, after falling as much as 4.4 percent. The stock has more than doubled this year.
Rule Change
The company's notional exchange loss during the quarter declined to 55.4 million rupees compared with 1.62 billion rupees a year earlier, according to the statement. That was because of a change in accounting rules by the government, which in March allowed companies to alter provisions for mark-to- market losses on foreign currency loans.
Spending on raw materials declined to 38 billion rupees, the company said. Benchmark hot-rolled steel averaged 26,000 rupees a metric ton in the quarter, compared with 40,000 rupees a year earlier, according to Niraj Shah, an analyst at Centrum Broking Pvt. in Mumbai.
Operating profit in the last quarter improved to 4.88 billion rupees from 3.03 billion rupees a year earlier.
"The first quarter has shown signs of improvement," Chief Financial Officer C. Ramakrishnan told reporters in Mumbai. "The availability of finance has considerably eased now."
Tata Motors sold its stake in Tata Steel to pay $150 million of debt used to purchase Jaguar and Land Rover, Ramakrishnan said. Income from businesses other than manufacturing gained 1 percent to 3.19 billion rupees, according to the statement.
That masked a 4.3 percent slump in vehicle sales in the quarter as freight operators bought fewer heavy trucks and a weaker economy damped car demand. Total sales fell to 127,340 from 133,079, the company said.
'More Pain'
"There could be some more pain left for commercial vehicle manufacturers," said Viswanathan Vasudevan, who helps manage about $250 million at Aquarius Investment Advisors Pte. in Singapore. "The economy can't turn around in just six months. When it comes to big spending, everybody is still cautious."
India's $1.2 trillion economy grew 5.8 percent in the quarter ended March, compared with an average of about 9 percent between 2004 and 2009. Prime Minister Manmohan Singh's government is boosting spending to speed up growth.
"Infrastructure spending is very crucial for the recovery in commercial-vehicle sales," said Gopal Agrawal, head of equities at Mirae Asset India Investment Co. in Mumbai. "It will take another five to six months to see an uptrend."
Tata Motors started selling the world's cheapest car, the Nano, this month. It selected the first 100,000 owners through a lottery from the 206,703 orders it got for the car during the initial sales period in April.
The first Nanos are being built at a plant in Pantnagar, northern India, which can produce 60,000 units a year. Annual output will increase by a further 350,000 when a facility in Sanand, western India, is completed at the end of this year. The cheapest version of the Nano retails for 123,360 rupees in New Delhi.
To contact the reporter on this story: Vipin V. Nair in Mumbai at vnair12@bloomberg.net .
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