Tata Motors Q2 net up 36 per cent; faces margin pressures

Tata Motors, the country's largest automobile company, continues to face margin pressures from rising operating costs and interest expenses. Though volume growth, especially in commercial vehicles, so far this year has been quite impressive — the bottom line growth has fallen short of market expectations. Performance of the company for the latest reporting quarter is poor when compared to the performance of its listed competitors in the auto sector.

For the quarter ended 30 September 2006, Tata Motors has reported a consolidated net profit of Rs536.44 crore, or Rs13.24 per share, after minority interests — an increase of 36.39 per cent over Rs393.31 crore, or Rs9.84 per share, for the same quarter of previous year. Net revenues increased 41.88 per cent to Rs7,702.66 crore from Rs5,428.88 crore a year ago.

Revenue growth in the automotive business was 39.42 per cent over the previous year quarter. Revenues from other operations, including manufacture and sale of construction equipment, engineering services and software development services, jumped 69.73 per cent over the previous year quarter to Rs613.78 crore.

Sequentially, net profits have increased 40.55 per cent from Rs381.67 crore reported for the first quarter ended June 2006 on a revenue growth of 13.76 per cent from Rs6,770.94 crore.

Operating profits, or EBIDTA — excluding other income, increased 35.5 per cent to Rs922.19 crore from Rs680.61 crore for the previous year quarter. Operating margins as a percentage of net sales declined to 11.97 per cent from 12.54 per cent a year ago. Sequentially, operating margins improved from 11.43 per cent achieved during the previous quarter.