Jaguar Land Rover Owner Tata Beats Profit Estimate With Ease
Comment of the Day

July 25 2023

Commentary by Eoin Treacy

Jaguar Land Rover Owner Tata Beats Profit Estimate With Ease

This article from Bloomberg may be to interest to subscribers. Here is a section:

Tata Motors Ltd. reported better-than-expected first-quarter income as supply-chain constraints eased, helping to lift sales of luxury cars.

Net income was 32 billion rupees ($391 million) in the three months through June, compared with a loss of 50 billion rupees a year earlier, the Mumbai-based company said in a statement Tuesday. Analyst estimates on average were for net profit of 24.5 billion rupees.

Luxury unit Jaguar Land Rover posted a quarterly profit before tax of £435 million ($559 million), compared with a loss of £524 million the year before. JLR’s quarterly revenue surged 56% to £6.9 billion, Tata Motors said. It reported a free cash flow of £451 million.

Eoin Treacy's view

Tata Motors is a wonderful Indian success story. The company generates around 29% of revenue from its domestic market. Buying the Jaguar/Land Rover brand was a master stroke and now accounts for two thirds of global revenue. India has plenty of examples of companies that have grown successfully beyond their domestic markets and done so without overt government support. That’s a clear point in favour of capitalism driven ingenuity and helps to explain why India’s capital markets have been so much more rewarding that China’s over the long term.

The share broke out to new all-time highs this month and is very overbought in the short-term. Nevertheless, a clear downward dynamic would be required to check the advance beyond a pause.

The Abrdn New India Investment Trust continues to firm from the region of the 200-day MA and a sustained move below it would be required to question medium-term recovery potential. 

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