The scrip of automobile giant Tata Motors slid Wednesday as concern grew over the company’s plans to expand capital expenditure on its Jaguar Land Rover (JLR) subsidiary to two billion pounds.
The company’s scrip at the Bombay Stock Exchange (BSE) was down 11.62 percent or 32.05 points at Rs.243.85. The stock had plummeted to the low of Rs.243.80 in intra-day trade.
The development comes as concerns grew over the lower operating margins reported by JLR in the fourth quarter of 2011-12, which stood at 14.6 percent lower than the market expectations of 20 percent.
JLR had reported a revenue growth of 51.5 percent in the quarter ended March 31, 2012, at 4.14 billion pounds from 2.735 billion pounds in the corresponding quarter of 2010-11.
JLR’s net profits stood at 696 million pounds in the quarter under review, from a net loss of 262 million in the fourth quarter of 2010-11. The net profit was aided by a one-time tax deferral worth 217 million pounds, or Rs.1,888 crore, during the quarter under review.
The company had also announced an increase in its capital expenditure in JLR to two billion pounds.
Sectoral analysts say that the markets were disappointed about the lower operating margins of JLR at 14.6 percent, from the expected margins of 20 percent in the quarter under review. Besides, the capital expenditure increase also had a denting effect on the company’s scrip.
According to the sectoral analysts, there were also concerns on the slow-down in European markets as well as in the Indian economy, that has effected sales of heavy and medium commercial vehicles.
Tata Motors had reported a weak standalone net profit for the quarter under review with a growth of only 1.4 per cent to Rs.565 crore in the March quarter, against Rs.573 crore a year ago.