TCS holds fort for Tata Group in Q4

The going does not seem to be that good, at least for some of the listed entities of the Tata Group.

Many of the companies have reported decline in profits in the fourth quarter compared with last year, while some have reported losses. Tata Consultancy Services (TCS) , however, held the group flag aflutter, with its impressive 8.4 per cent profit growth in the quarter, powering it to be the country’s second-most profitable company for fiscal 2014-15.

Take the case of Tata Motors. It posted Rs 1,717-crore net profit for the quarter ended March, against Rs 3,918 crore last year. This was perhaps its lowest profits in the last nine quarters led by a decline for Jaguar Land Rover (JLR) cars in China. JLR has had to appoint a new sales head for China following dismal performance over the last few quarters.

Morgan Stanley, however, believes a turnaround is certainly round the corner. “For the India business, we believe FY15 marked the earnings trough, and we expect gradual recovery from here, with EBITDA margins swinging from -1 per cent in FY15 to 8 per cent by FY17, driven by sharp volume recovery across segments. We expect 26 per cent FY15-17 earnings CAGR, driven by JLR maintaining margins around 18 per cent levels and the Indian business turning around,” a recent note said.

Write-down hits Tata Steel

Tata Steel reported a consolidated net loss of Rs 5,674.29 crore as against a net profit of Rs 1,035.87 crore last year due to writedowns. Tata Global Beverages reported a lower net profit of Rs 42.91 crore in the fourth quarter as against Rs 101.36 crore an year ago, while Tata Chemicals also reported a decline in net profit during the fourth quarter at Rs 54.72 crore compared with Rs 81.14 crore. Tata Teleservices continued its loss-making run by logging in a loss of Rs 163.88 crore in the fourth quarter compared with a loss of Rs 111.61 crore an year ago.

But TCS reported an 8.4 per cent increase in net profit for the fourth quarter at Rs 5,773 crore, compared with Rs 5,328 crore in the sequential quarter as per Indian GAAP. Tata Power reported a net profit of Rs 213.37 crore as compared with Rs 84.18 crore an year ago. No wonder analysts believe the group can tide over the difficulties and emerge stronger.

“Tata Group has a legacy of creating successful companies. Recent times have been tough for them. However, these bad times have given them bigger scale and repeatability as a global organisation. I think the situation will look much better in the next 2-3 years once domestic demand picks up,” an analyst told Deccan Herald.
DH News Service