By Nandan Mandayam
(Reuters) -India’s Tata Motors reported a surprise drop in second-quarter profit and its first revenue decline in 10 quarters on Friday, hurt by weakness in both its luxury vehicles unit, Jaguar Land Rover, and domestic businesses.
The company posted a profit of 33.43 billion rupees ($396.4 million) for the quarter ended Sept. 30, down 11% on-year.
Analysts, on average, had expected a profit of 43.96 billion rupees, per data compiled by LSEG.
Tata Motors is India’s third-largest carmaker by volume but relies on British luxury carmaking unit JLR for two-thirds of its revenue.
The company expects JLR sales and revenue to recover in the second half of the year to March 2025, as disruptions at a key aluminium supplier eases.
The disruption led to a 10% drop in quarterly volume and along with higher promotional expenses pulled JLR revenue 1% lower.
“We don’t see variable marketing expenses going up from current levels for the core JLR models,” Tata Motors’ group finance chief PB Balaji told reporters in a post-earnings media call.
The ‘Range Rover’ SUV manufacturer maintained its full-year EBIT margin expectation of 8.5% and full-year revenue estimate of 30 billion pounds ($38.86 billion), implying an at least 16.5% sequential rise in the second half.
Tata Motors’ domestic carmaking business reported a 4% revenue drop, hurt by weak demand, while the commercial vehicles business reported a 14% revenue decline.
Domestic car sales in November would be key to gauge demand for the rest of the year, following a jump in retail sales the previous month, Balaji said.
If growth sustains, “we can say the worst of the first half is behind us.”
When asked about sluggish domestic electric vehicle sales and rising competition, Balaji remarked that Tata Motors’ portfolio was “wide enough” to maintain its dominant market leadership.
($1 = 84.3410 Indian rupees)
($1 = 0.7720 pounds)
(Reporting by Nandan Mandayam in Bengaluru; Editing by Varun H K and Eileen Soreng)
