Tata Motors, India's largest truck maker, said on Thursday its quarterly profit had nearly trebled, matching expectations, as domestic sales boomed in a surging economy.
But its shares dropped almost five percent, tracking a weaker Bombay market lower after a strong run in recent months.
Tata's truck sales, like those of rival Ashok Leyland, surged as an economic recovery spurred operators to replace ageing fleets and the government's huge cross-country highway project fuelled demand.
Sales growth is seen steady in the coming year as the economy grows while margins are expected to be firm due to price increases, rising truck sales and car exports, analysts said.
"The results are excellent," said Imran Contractor, head of research at Stratcap Securities. "Margins have improved from the previous quarter, with the proportion of commercial vehicle sales to total revenue increasing."
The company, also the third-largest car and utility vehicle maker, posted a net profit of 2.11 billion rupees ($46.4 million) in its fiscal third quarter to December 31, up from 757.10 million rupees a year earlier.
Total income rose 56 percent to 34,149.20 billion rupees.
Net profit had been expected to lead 168 percent to 2.03 billion rupees on a rise in net sales 47 percent to 32.27 billion rupees, based on median figures in a Reuters poll of 13 analysts, released early last week.
Shares of the company, in which foreign institutional investors had a 22 percent stake at the end of 2003, had risen 23 percent in the three months to Wednesday's close of 455.50 rupees, while the key Bombay index climbed 26 percent.
But in a weak market after the results were announced, the shares were down 4.6 percent at 437.50 rupees, which according to Reuters Research is 15 times its earnings per share forecast for the fiscal year to 2005.
Stratcap's Contractor said the weakness of Tata Motors' shares was due to margin-selling and technical factors, which had also pulled down several other blue chips.
Tata Motors, the flagship of India's second-largest business group, the Tatas, saw truck and bus sales in the past quarter rise 47 percent to 40,495 units, while car and utility vehicle sales rose 38 percent to 30,243 units.