Indian shares down; Tata Motors, Sun Pharma drag

Tata Motors was trading down 8.42% at Rs 445.8 on BSE, extending the yesterday's fall of 3.7%.

Mumbai: Tata Motors Ltd on Wednesday plummeted as much as 9%-its steepest fall in three months-after most of the brokerages cut its target price in light of the company reporting 96% decline in its net profit.

Operating profit (EBITDA) of the standalone business for the quarter stood at Rs153 crore with operating margin at 1.5 per cent. Loss before and after tax for the quarter ended 31 December 2016 was Rs1,032 crore and Rs1,046 crore, respectively, against Rs139 crore and Rs137 crore, respectively, for the corresponding quarter a year ago.

The benchmark BSE Sensex was 0.2 percent lower at 28,282.82.

Tata Motors' reported 96% decline in its consolidated net profit to ₹112 crore for the third quarter ended December 31, as compared with ₹2,953 crore in the same period of a year ago, due to a decline in the sales of medium and heavy commercial vehicles and a squeeze in margins from the Jaguar and Land Rover business. Its actual Oct-Dec net profit was minuscule compared to the Reuters' analyst poll estimate of Rs 2,248 crore, and ET Now poll estimate of Rs 2,635 crore. At 167 million pounds, JLR's profit in the third quarter, was down as much as 62% from a profit of 440 million pounds it had recorded a year ago.

JLR earnings were the major drag on consolidated results.

Passenger vehicles grew by 25.4% y-o-y with auto segment posting a growth of 31.1% on the back of continued strong response of Tiago, Tata Motors' said.

Religare Institutional Research said in an investor note that profit margins at Jaguar Land Rover, which Tata Motors acquired in 2008, would likely remain weak in the coming quarters due to hedging losses and higher marketing incentives.

According to CLSA, Tata Motors reported very weak 3Q results.

The company's commercial vehicles business saw a "demand shrinkage" owing to the Indian government's shock move in November to withdraw high-value banknotes from circulation, it said.

Notwithstanding increased passenger vehicles sales thanks to new launches such as Tiago, Tata Motors' domestic operations suffered on the back of a drop in commercial vehicles volumes.

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