Tata Motors beats estimates, stock continues selloff
Although Tata Motors (ADR: TTM) reported more than a two-times jump in its fourth-quarter consolidated net profit, beating estimates, the company also said it wrote back GBP217 billion of tax at Jaguar Land Rover during the past quarter. Yes, that read as a billion, but there is a catch; so read on.
More important, analysts consider any action like a writeoff as key to understanding the price action; and that is why Tata Motors (ADR: TTM) will likely endure some volatility for at least the next few days.
That is also why stock charts are so important to traders. It is the price action after the news that counts more than the news itself. In the case of Tata Motors, the daily chart shows a pop upward on the open, but it fell back after that. This is not a bullish action at all.
Then, MarketWatch which reported directly from New Delhi, the home of Tata Motors, had to include a correction. Tata Motors later admitted that it had misstated the amount of tax write-back in the 5th paragraph, whereby the tax writeoff was GBP217 million, not billion. So, MarketWatch provided the correct version from Tata Motors but still confirmed the more than twofold jump in the company’s fourth-quarter consolidated net profit, beating estimates was intact.
Tata specifically noted that profit in the January-March period rose to INR62.34 billion from INR26.38 billion a year earlier. MarketWatch was quick to catch that beat the INR37.14 billion average of estimates in a Dow Jones Newswires poll of 11 analysts. In addition, sales climbed 44% to INR506.09 billion from INR351.48 billion.