Tata Motors shares down after JLR Miss Estimates image

Shares in Tata Motors dropped as much as 11.9 percent on Wednesday after its main Jaguar Land Rover unit posted earnings that missed some analysts’ estimates.

It was the biggest loser on the 30-member BSE India Sensitive Index, which dropped 0.6 percent. Jaguar’s fourth-quarter earnings before interest, taxes, depreciation and amortization of 605.4 million pounds ($945 million), missed estimates at Deutsche Bank AG and Nomura Holdings Inc.

The results from the maker of the Range Rover Evoque chip away at the optimism that’s helped Tata Motors become the third- best performer this year among the world’s biggest automakers. Jaguar Chief Executive Officer Ralf Speth is counting on demand from China and Russia to help offset the economic slump across Europe.

The steep decline came even after Tata Motors said on Tuesday fiscal fourth quarter net profit had more than doubled, as it had been driven by a one-off tax gain.

Steep gains in Tata Motors shares this year, with the auto maker up 54 percent in 2012 as of Tuesday’s close, magnified the falls, traders said.

“Overall earnings were in line with expectations but the mix was adverse as India business rebound looks unsustainable given unfavorable macro,” Morgan Stanley said in a note.

“Tata Motors disappointed the street with putting out JLR margins at 14.5%, v/s the street’s over optimistic estimate of 19% and our cautious estimate of 15.5%. Higher other expenses and adverse product and geography mix led to this fall,” said Ashwin Patil, Equity Research Analyst, LKP Securities Ltd.