MUMBAI - Tata Motors, India's biggest vehicle maker, reported a return to operating profit for its British Jaguar Land Rover unit on Friday, as cost cuts begin to bear fruit and new models attract buyers.
Jaguar Land Rover (JLR) has weighed on the firm's results since its takeover last year, fanning fears the Tata group, the Indian business empire that controls Tata Motors, had overstretched itself just as the global financial crisis hit.
But on Friday Tata Motors said it made a consolidated net profit of 217.8 million rupees ($4.7 million) in its fiscal second quarter, helped by investment gains and higher sales volumes, having lost 9.42 billion rupees in the same July-September period last year.
JLR made an operating profit of 41.3 million pounds ($68 million) in the three months and its net loss narrowed to 60 million pounds from 240 million pounds a year ago.
There is a recovery happening in Europe, one of (JLR's) key markets. They also have a better product mix now with the new launches, said K.K. Mittal, head of portfolio management services at Globa Capital. We are bullish on the stock.
Earlier this month, Ford, Renault, Peugeot, Toyota and BMW signalled the automotive sector was stabilizing, but most stopped short of predicting a rebound next year.
September quarter sales volume at JLR rose 23 percent to 44,300 vehicles from 35,900 in the preceding quarter, and Tata Motors said there were signs of improved demand for other key units after a global slump in the auto sector.
It is a surprise result. We did not expect the turnaround to happen so fast, said Surjit Arora, auto analyst with Prabhudas Lilladher.
New JLR products such as the upgraded Land Rover, Range Rover Sports and Discovery 4 were getting a good reception and aggressive cost cuts were also paying off, Tata Motors said.