MUMBAI (Reuters) - Tata Motors shares skidded on Tuesday after second-quarter profit missed estimates by a wide margin due to a weak performance at its Jaguar Land Rover unit, although analysts said they expect earnings to improve in the months ahead.
The results, out late on Monday, come amid a power struggle between Tata group holding company Tata Sons and its former chairman Cyrus Mistry, who was ousted last month but remains the chairman of Tata Motors.
Traders said, however, that with no clear outcome on the tussle expected for a while, that Tuesday's 8 percent share decline was entirely earnings-driven.
Hedging losses and a one-time provision related to new customer quality programmes at Jaguar Land Rover saw the automaker's overall net profit for the three months ended Sept. 30 come in at 8.5 billion rupees ($125.3 million).
That was better than a loss a year earlier but well below the 27.4 billion rupees profit expected by analysts.
But the launch of new models from Jaguar Land Rover, such as the Jaguar F-Pace, is expected to drive growth in vehicle sales for the rest of the financial year.
"JLR margins, adjusted for all one-offs and hedging losses, were below the level expected from the currency boost. That said, a strong model cycle and theoretically strong margin picture from benign currency provides comfort," analysts at Jefferies said.
Independent directors at Tata Motors gave Mistry a tacit nod, but stopped short of an outright endorsement, or picking sides in the power struggle within India's largest conglomerate,
Tata Global Beverages, which co-owns and runs Starbucks coffee stores across India, will be the next company in the Tata conglomerate to report results later on Tuesday. Mistry is also chairman of the Tata Global Beverages board.
($1 = 67.6999 Indian rupees)
(Reporting by Aditi Shah and Swati Bhat; Editing by Rafael Nam and Edwina Gibbs)