Bloomberg News - Tata Motors Ltd., the owner of Jaguar Land Rover, fell to the lowest in almost three months as earnings from its Indian operations declined.
The shares tumbled 6.5 percent to 1,087.4 rupees at 11:58 a.m. in Mumbai, poised for the lowest closing price since Feb. 28. About 4.8 million shares changed hands, more than double the three-month average.
Profit, excluding the Jaguar Land Rover operations, fell 4 percent to 5.73 billion rupees ($127 million) in the three months ended March, data compiled by Bloomberg show. Group net income, including the Jaguar Land Rover business, increased 18 percent to 26.4 billion rupees.
"The numbers very clearly show that the domestic business is under significant pressure," Sudip Bandyopadhyay, managing director and chief executive officer at Mumbai-based Destimoney Securities Pvt., said by phone. "That's causing the sell-off in the stock despite good annual numbers."
Group profit for year ended March was 92.7 billion rupees, Tata Motors said yesterday after the market closed. Analysts surveyed by Bloomberg had estimated a profit of 90.6 billion rupees. The company didn't break out the fourth-quarter numbers.
Tata Motors, whose Nano model is the world's cheapest car, paid $2.4 billion in June 2008 to buy the Jaguar car and Land Rover SUV brands from Ford Motor Co., and it combined them into a single division. The Jaguar Land Rover business contributed 57 percent of sales in the year ended March 31.
"While Tata Motors' fourth-quarter consolidated profit was in-line with estimates, margin pressures were clearly visible with both India and JLR reporting a quarter-on-quarter margin drop," CLSA Ltd. said in a report dated yesterday. "Given slowing commercial vehicles and car sales in India, declining market share in cars, slowing Jaguar sales and rising Jaguar incentives, we see more risk to margins in fiscal year ending 2012."
The brokerage downgraded the stock to "outperform" from "buy" and cut the price target to 1,320 rupees a share from 1,500 rupees.
