Tata Motors, the country’s largest commercial vehicle manufacturer, stopped its losing streak by reporting

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a standalone net profit of Rs 400 crore for the third quarter ended December 31, 2009 on the back of government stimulus package.

In comparison the company had posted a loss of Rs 263 crore in the same quarter of December 2008. However, analysts said that the company registered better operating margins on a year on year (YOY) basis, but net profit was below their expectations, due to other income which was lower by almost Rs 47 crore. Mitul Shah, auto analyst, First Global said, “Tata Motors delivered a mediocre performance in Q3 FY10, with the company reporting robust margins, though profits came below expectation due to absence of other income.” The company’s net profit trailed the Rs 474 crore median of 19 analyst estimates compiled by Bloomberg.

Total income of the company rose by over 90 per cent YOY to Rs 8,979.9 crore during the October- December 2009 period. A higher mix of of larger value medium and heavy commercial vehicles whose sales grew 121.6 per cent drove growth in top line and bottom line. In passenger vehicles sales of the Indigo range grew 63.5 per cent on the back of the new Manza. Ravi Pisharody, president commercial vehicles, Tata Motors said, the current quarter may see customers preponing their purchase of M & HCV’s before the new emission norms come into effect from April 1, 2010.

C Ramakrishnan, chief financial officer, Tata Motors said, “Volume recovery, better cost management and marginal price increase also helped the company to improve operating margins by 1092 basis points to 12.8 per cent during the quarter. But maintaining them during the current quarter will be difficult mainly due to threat arising out of increasing input costs, raw material prices and possible withdrawal of stimulus package by the government.” Prakash M Telang, managing director – India operations, Tata Motors said, “The prices of all inputs such as rubber, aluminium, copper and steel are all on an upswing. Not all of the input cost increases have been passed on to customers as we have a philosophy of giving value to customers in the Tata group.”

“In this quarter, the excise duty on vehicles is likely to go up, which will put more pressure on operating margins of Tata Motors,” said Umesh Karne, auto analyst, Brics Securities.

In the October-December quarter, commercial vehicles sales increased by 89 per cent to 93,520 units, while passenger vehicles, including Fiat and Jaguar and Land Rover vehicles distributed in the domestic market grew by 46 per cent to 61,593 units.

“Tata Motors has also decided to increase production of Tata Nano from 180 per day to 200 units per day at its Pantnagar facility in Uttarakhand. Meanwhile, the company has started trial production of Tata Nano at the mother plant at Sanand in Gujarat, which is expected to become fully operational in a couple of months,” Telang added.