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BOMBAY, Oct 29 (Reuters) - Tata Motors Ltd , India's largest truck maker, said on Wednesday its quarterly profit more than trebled as truck industry sales soared, powered by rising government investment to build a national highway network.
The company is also the country's largest maker of buses and the third largest producer of both cars and utility vehicles.
Sales were further buoyed by a shift in demand from older two-axle vehicles to larger multi-axle trucks, which can match the railways in freight costs, and by rising car demand, spurred by a tax cut and lower interest rates.
Tata Motors, part of India's second largest business group, the Tatas, said net profit rose to 2.07 billion rupees ($45.6 million) in the fiscal second quarter ended September 30 -- from 588 million rupees a year earlier.
Net sales rose 46 percent to 37.63 billion rupees. Other income soared to 277.6 million rupees from 39.9 million rupees.
The Reuters poll of 10 brokerages forecast net profit would nearly triple to 1.73 billion rupees and revenue to rise 22 percent to 31.34 billion rupees.
But its operating profit margin, a key measure of efficiency, merely inched up to 13.82 percent from 13.26 percent in the preceding quarter, although it was much higher than last year's 12.08 percent. "Though the company sold more vehicles in the past quarter than in the previous three months, its operating profit margin has risen proportionately, which is worrying," said Imran Contractor, head of research at StratCap Securities .
"But the outlook is positive as volume growth will continue to be strong, which will ensure higher profits."
Tata Motors' shares were down 1.81 percent at 359 rupees after the results in a flat market, but traders said the fall was due to players unwinding positions before futures contracts expire on Thursday.
Tata Motors' shares have risen 85 percent since the beginning of the second quarter outpacing a 31 percent rise in the benchmark Bombay index , on expectations of the good results and growing investor preference for automobile stocks.
BUOYANT SALES
Tata Motors, which mainly competes with Ashok Leyland Ltd in the world's fifth biggest commercial vehicles market, said its sales of trucks and buses combined in July-September jumped 57 percent from a year ago to 40,225 units, outpacing industry growth of 42 percent.
Sales of cars and utility vehicles rose 29 percent to 37,903 units, faster than industry sales of 23 percent.
Tata Motors posted losses in fiscal 2000/01 and 2001/02 due to a cyclical decline in its mainline truck business and poor initial sales of its Indica hatchback, India's first homegrown car launched in 1999.
But sales of both trucks and cars have rebounded since then.
Thirteen companies, including Maruti Udyog Ltd , a unit of Japan's Suzuki , Hyundai and General Motors make cars, vans and utility vehicles in India, a market expected to touch a million vehicles this fiscal year.
Tata is also poised to improve foreign sales. In the past quarter, Britain's MG Rover Group began buying its Indica cars for sale in UK and also expects to buy bankrupt South Korean firm Daewoo Motor's truck unit by the end of 2003. (US$1 = 45.3 Indian rupees)