Economic news

India's Tata Motors Hits Record High on Q1 Profit Beat, Capital Reduction Plan

BENGALURU, July 26 (Reuters) - Shares of Tata Motors rose as much as 4.1% to a record high on Wednesday after the company reported a better-than-expected first-quarter profit and announced a plan to cancel its 'A' ordinary shares.

The automaker was the second-biggest gainer on the benchmark Nifty 50 index after engineering firm Larsen & Toubro.

The Mumbai-based company posted a consolidated net profit of 32.03 billion rupees ($391.3 million) for the April-June quarter, compared with a year-ago loss of 50.07 billion rupees.

That beat analysts' estimates of a profit of 26.29 billion rupees, per Refinitiv IBES data.

Its UK-based Jaguar Land Rover (JLR) unit, which accounted for 70% of Tata Motors' revenue, benefited from strong demand for its higher-margin SUVs like the Range Rover and an improving supply of semiconductors after crippling shortages for several quarters.

JLR logged its highest production levels in nine quarters in April-June, while strong retail sales led to a 66% surge in revenue.

"Strong free cash flow (FCF) generation is expected to support higher investments towards electrification at JLR," JM Financial Institutional Securities said in a note.

Kotak Institutional Equities increased its estimates for the company's consolidated earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 12% to factor in the first-quarter performances of JLR and Tata Motors' domestic commercial vehicle business.

Separately from the results, Tata Motors said it will cancel its 'A' ordinary shares in a move to simplify its securities structure, sending Tata Motors DVR shares up nearly 17%.

Reporting by Varun Vyas in Bengaluru; Editing by Sohini Goswami and Eileen Soreng

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree