By -
Jan 23, 2013
Tata Motors Ltd. (TTMT) fell the most since
May in Mumbai trading after its Jaguar Land Rover Plc unit said
profit growth probably stalled on currency shifts and as the
cheaper Evoque model attracted a higher share of buyers.
Tata Motors, which derived three quarters of its operating income from Jaguar Land Rover in the last financial year, slumped as much as 10 percent and was trading 7.6 percent lower at 289.30 rupees as of 9:21 a.m., headed for the biggest decline in almost eight months.
Earnings before interest, taxes, depreciation and amortization in the three months through December were similar to figures during the preceding two quarters, and the margin relative to sales was probably “slightly lower,” the Gaydon, England-based division said yesterday in a U.S. filing. The Ebitda performance reflects “less favorable exchange rates” and higher mix of sales of the SUV, the manufacturer said.
“The company saying that margins will be lower is a big concern,” said Umesh Karne, an analyst with BRICS Securities Ltd. in Mumbai. “The indication that capital expenditure will be higher as well as about negative cash flow is a concern, as we factored positive cash flows into the share price.”
Jaguar Land Rover’s margins had declined in the two earlier quarters, according to data compiled by Bloomberg. The lower- priced Evoque sport-utility vehicle accounted for almost 30 percent of Land Rover’s wholesale deliveries in the six months ended Sept. 30.
The Evoque, which began deliveries in September 2011, sells for just under 29,200 pounds ($46,300), versus the 38,825-pound starting price for Land Rover’s Discovery 4, a larger SUV, according to the brand’s website.
Jaguar Land Rover may have negative free cash flow in the year beginning April 1 as the unit raises annual capital spending to 2.75 billion pounds from 2 billion pounds to develop models and build a factory in China. Free cash flow was probably also negative in the third quarter, it said.
The luxury division, which has 2.18 billion pounds in cash, may raise additional funds for investments from capital markets and through bank loans, it said.
Detailed fiscal third-quarter figures will be released with Mumbai-based Tata Motors’ earnings statement in February, the division said.
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net
Tata Motors, which derived three quarters of its operating income from Jaguar Land Rover in the last financial year, slumped as much as 10 percent and was trading 7.6 percent lower at 289.30 rupees as of 9:21 a.m., headed for the biggest decline in almost eight months.
Earnings before interest, taxes, depreciation and amortization in the three months through December were similar to figures during the preceding two quarters, and the margin relative to sales was probably “slightly lower,” the Gaydon, England-based division said yesterday in a U.S. filing. The Ebitda performance reflects “less favorable exchange rates” and higher mix of sales of the SUV, the manufacturer said.
“The company saying that margins will be lower is a big concern,” said Umesh Karne, an analyst with BRICS Securities Ltd. in Mumbai. “The indication that capital expenditure will be higher as well as about negative cash flow is a concern, as we factored positive cash flows into the share price.”
Currency Move
The pound dropped after a 0.1 percent decline in retail sales last month added to signs the U.K.’s economy is struggling to recover. The euro has gained more than 3 percent against the pound this month.Jaguar Land Rover’s margins had declined in the two earlier quarters, according to data compiled by Bloomberg. The lower- priced Evoque sport-utility vehicle accounted for almost 30 percent of Land Rover’s wholesale deliveries in the six months ended Sept. 30.
The Evoque, which began deliveries in September 2011, sells for just under 29,200 pounds ($46,300), versus the 38,825-pound starting price for Land Rover’s Discovery 4, a larger SUV, according to the brand’s website.
Jaguar Land Rover may have negative free cash flow in the year beginning April 1 as the unit raises annual capital spending to 2.75 billion pounds from 2 billion pounds to develop models and build a factory in China. Free cash flow was probably also negative in the third quarter, it said.
The luxury division, which has 2.18 billion pounds in cash, may raise additional funds for investments from capital markets and through bank loans, it said.
Detailed fiscal third-quarter figures will be released with Mumbai-based Tata Motors’ earnings statement in February, the division said.
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net
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