Tata Motors, one of the largest auto companies in India, witnessed a stupendous 3 per cent rise in its share prices as trading on Sensex concluded with a 0.2 per cent rise on April 19, 2012. This rise was due to expectations associated with rise in overall profits for the last quarter of Financial Year 2011-12, wherein the Jaguar Land Rover (JLR) brand will be responsible for more than 2/3rd of the revenue and as much as 90 per cent of the bottom line.
As per Bloomberg's estimates of approximately 38 brokerage houses, Tata Motors will post consolidated net profit worth Rs. 3,754 crores for the months of January-March 2012. With these figures, the company will become the fifth biggest company in India in terms of profits during the same period. It will rank only behind Indian Oil, Reliance Industries, Bharat Petroleum and Coal India in the nation. Notably, its bottom line will exceed that of State Bank of India, NTPC, TCS and ITC, even though their market capitalisation is more than Tata Motors'.
According a report recently published by Religare Institutional Research, strong volumes will help the company register excellent operational performance. The sales of JLR brand have been robust due to the resounding success of models like Land Rover Range Rover Evoque, a Sports Utility Vehicle (SUV) and Jaguar XK series of grand tourers. Sales of the brand have not only been great in conventional markets like UK, but also in new ones, such as China and Russia.
On this, Mahantesh Sabarad, Analyst, Fortune Financials, "Such a robust number from Tata Motors will give a big boost to the overall success of the JLR turnaround plan, which has been judiciously worked upon."
Tata Motors acquired the Jaguar and Land Rover marquees from Ford Motors, the American automotive giant, in 2008 for $ 2.5 billion. Upon acquisition, the two were converted into a single different subsidiary of the Indian car maker. According to three analysts working at Bloomberg News, the current average estimated value of the JLR brand is $ 14 billion.
JLR, whose sales are 45 per cent more on YoY basis, recently issued bonds in order to raise an amount of £ 500 million for itself and plans to bring out 40 new products over the course of the next 4 to 5 years. In April 2011, JLR hinted that approximately £ 1.5 billion will be infused each year for the coming five years for capital expenditure as well as product development. Close to £ 355 million will be invested by the brand to establish an engine plant in UK.
