UPDATE 2-Tata Motors profit soars on Jaguar, Land Rover demand

Tue Aug 10, 2010 8:19am EDT

Related Topics

* Q1 profit 19.89 bln rupees vs forecast 9.8 bln rupees

* Revenues 270.56 bln rupees vs forecast 265.2 bln rupees

* Co sees strong demand from China, UK for JLR brands

* Shares rise 5 pct to hit highest level in over 20 yrs (Adds analyst comment, share price movement, details)

By Janaki Krishnan

MUMBAI, Aug 10 (Reuters) - India's Tata Motors (TAMO.BO) swept past forecasts with a fourth straight quarterly profit, driven by demand for its luxury Jaguar and Land Rover brands, boosting its shares to their highest in at least two decades.

The company's Jaguar and Land Rover (JLR) unit, which Tata bought from Ford Motor Co (F.N) in 2008, is expected to fuel growth in coming quarters as demand for luxury brands increase, particularly in emerging economies.

Rising numbers of wealthy, brand-conscious Chinese are overtaking debt-burdened Europeans and Americans as the source of sustained demand for Europe's premium cars.

Tata Motors reported a consolidated net profit of 19.89 billion rupees ($429.59 million) for the quarter to June 30, swinging back from a year-ago net loss of 3.29 billion rupees. Revenues rose to 270.56 billion rupees from 164.73 billion rupees.

A Reuters poll estimated net profit at 9.8 billion rupees on net sales of 265.2 billion rupees.

During the quarter ended June, Tata Motors sold 181,708 vehicles, up 48 percent rise from a year earlier.

Tata's results come amid a surge in demand for cars, trucks and buses in India. Car sales in India hit a record high in July, jumping 38 percent from a year earlier, boosted by the launch of new models and the strong economy. [ID:nTOE672059] [ID:nSGE67999W]

Tata Motors is the country's leading maker of trucks and buses with about two-thirds of the market. It also makes utility vehicles such as the Safari, Tata Magic and Winger and cars such as the ultra-cheap Nano, Tata Indica and the premium sedan Indigo Manza.

"The numbers have far exceeded our expectations," Surjit Arora, an analyst at brokerage Prabhudas Lilladher, said.

"The momentum should continue as JLR is seeing strong sales both in the UK and China," he said.

Shares in Tata Motors, valued at $11 billion, closed up 4.2 percent at 957.30 rupees, outperforming the benchmark BSE index .BSESN which fell 0.4 percent. It earlier hit 967.30 rupees -- their highest level in more than two decades, according to Thomson Reuters data.

Tata shares have soared some 660 percent since their lows of 126 rupees in February 2009 and have risen about 21 percent so far this year, outpacing a 4 percent rise in the main index and a rise of about 16 percent in the sector index .BSEAUTO.

The JLR unit sold 57,153 vehicles in the June quarter, up from 35,947 a year earlier.

EXPANSION PLANS

Chairman Ratan Tata recently said in the company's annual report that it would add more Jaguar models, including an entry-level car, a station wagon and a roadster. [ID:nSGE672058]

The company has begun a search to replace Ratan Tata, who is due to retire by the end of 2012.

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For Starmine comparative data click:

r.reuters.com/weq24n

For newsmaker on Ratan Tata: [ID:nnSGE6730LJ]

For Tata Motors July vehicle sales: [ID:nnSGE67000W]

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On Tuesday, the company said it was in talks with potential joint venture partners to start assembly-line operations for the JLR brands in China. The company also plans to start assembling Land Rover vehicles in India next year.

Other automakers are also taking advantage of the growing demand for luxury vehicles in China. Sales of Daimler's (DAIGn.DE) luxury brand Mercedes-Benz grew by just over 17 percent in July.

BMW (BMWG.DE), the world's biggest maker of premium cars, posted its best ever quarterly pretax profit earlier this month. It said it had never sold as many Rolls-Royce models in six months as it had this year, pointing to a sharp recovery and broad-based demand for luxury cars. [ID:nLDE6711IW]

But recovery is still unsteady in the United States and Europe where the industry is investing in technology to improve fuel economy.

Volatile currencies could impact JLR profitability, Tata Motors said on Tuesday.

Supply of engines from Ford, with which Tata Motors has an agreement, was not keeping pace with demand for JLR products, the Indian firm said. ($1=46.3 rupees) (Writing by Pratish Narayanan; Editing by Jui Chakravorty and Tomasz Janowski)

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