Driven by disappointing results, shares of Tata Motors Limited embarked on a trip down south Wednesday morning, and hit a low of Rs 441.25, and are still struggling to get back on track.
The stock is currently trading at Rs 446.80, down more than 8% from its previous closing price. On BSE, the Tata Motors counter has clocked a volume of 15.47 lakh shares so far in the session, nearly three times the average daily volume.
On the National Stock Exchange, the Tata Motors counter has clocked a volume of more than 23 million shares so far in the session.
Tata Motors DVR, a Nifty50 component, is down 8% at Rs 273.90, around Rs 4 off the day's low of 269.80
Tata Motors said on Tuesday that it posted a consolidated net profit of Rs 111.57 crore in the quarter ended December 2017, down as much as 96% from the year-ago quarter. The drop was due largely to a steel fall in profit at the company's Jaguar Land Rover unit and higher losses in the company's Indian operations. Consolitated sales dropped 2% in the third quarter.
A drop in earnings was expected by anlaysts, but then, it turned out to be substantially higher than what was forecast.
The Tata Group, on the whole, was mired in allegations and counter-allegations between the promoter group and Cyrus P Mistry, who was sacked as Chairman of Tata Sons during the October - December quarter. Besides Mistry's exit, other factors like the impact of demonetization and Britain's exit from the Euro too contributed to the drop in earnings in the quarter.
Jaguar Land Rover, which is owned by Tata Motors, is the largest car manufacturer in the United Kingdom, contributes heavily to the company's bottomline. 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. However, JLR's revenue in the quarter was up 13%. The unit's retail sales volume rose 13.5% in the December 2016 quarter.
Tata Motors' consolidated operating margin dropped to 7.6% from a year ago, due to weak performance of Jaguar Land Rover, which saw its operating margin fall to 9.3%, the lowest in over six years.
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. Not just that. Tata Motors' medium and heavy vehicles segments too were under pressure due to demonetization.