By Suresh Seshadri
BOMBAY, Oct 28 (Reuters) - Tata Engineering & Locomotive Co, India's top truck maker, is expected to report a 152 percent jump in second-quarter profit from the previous quarter, with resurgent truck sales seen spurring earnings in the coming quarters.
The median forecast for TELCO's net profit was 706 million rupees ($14.6 million) for the quarter to end-September, up from 280 million in April-June, according to a Reuters poll of analysts. It posted a loss of 613.8 million in the second quarter last year.
TELCO, also India's third-largest car maker, stands to gain significantly in the rest of the year from a boom in construction activity, which is fuelling demand for the transport of commodities such as cement, analysts said.
"They will continue to remain strong in the commercial vehicles segment in the next two quarters, with growth driven by higher sales volumes of the heavier 25-tonne multi-axle trucks," said Pramod Amthe, auto analyst at Cholamandalam Securities Ltd.
Fleet operators are turning to multi-axle trucks as their cost per tonne carried matches that of the railways.
Sales of Indian commercial vehicles, or trucks and buses, in April-September surged 31 percent from a year earlier as transport operators bought new vehicles to replace ageing fleets after nearly two years of poor demand.
TELCO's truck and bus sales grew 32 percent by volume in April-September from a year earlier to 45,598 vehicles. Commercial vehicles contributed nearly half of its total sales volume in the first half.
The automobile major, which also makes utility vehicles, is part of the salt-to-software Tata group, India's second-largest conglomerate by sales. It is on a recovery path after turning a profit in January-March following seven quarters of losses.
The median forecast for net sales was 22.7 billion rupees, up nearly 30 percent from the previous quarter.
CARS RECOUP INVESTMENT
The company, which invested 17 billion rupees in a project to design and build a new passenger car in the late 1990s, has now begun reaping returns from the venture. Its Indica hatchback now commands a 23 percent market share among compact cars.
"Passenger cars should help improve their operating margins, and the Indica project, which returned an operating profit in the fourth quarter last year, should do well this year, with volumes seen over 90,000," said S. Ramnath, an analyst at Taib Securities.
TELCO's Indica competes in India's fastest-growing car segment with Hyundai's Santro, Fiat's Palio and models from Suzuki's Indian car giant Maruti. It notched sales of 35,078 in April-September.
Compact car sales have grown the fastest in the past three years, accounting for 59 percent of India's total new car sales of 258,467 units in the six months to September.
TELCO shares closed up 0.26 percent at 132.65 rupees on Monday, while the Bombay benchmark index shed 1.43 percent. (US$1 = 48.42 Indian rupees)