MUMBAI - Tata Motors, India's top vehicle maker, reported a rise in sales and margins at its Jaguar Land Rover (JLR) unit as luxury buyers returned after the global crisis, helping send its shares up more than 6 percent.

JLR had been a drag on the company's performance since it bought it in 2008 from Ford for $2.3 billion, just as the global downturn hit consumer spending on high-end vehicles such as Jaguar's X-series and Land Rover's Range Rovers.

There has been a recovery, no doubt, and the signs of revival in Europe and North America are encouraging, but it is still fragile, said K.K. Mittal, head of portfolio management services at Globe Capital.

At the domestic level, while commercial vehicles sales outlook looks good, its passenger car segment will be under pressure from increased competition, he said.

Tata Motors reported a consolidated net profit of 6.5 billion rupees ($141 million) for the December quarter, after a loss of 26 billion rupees a year ago. Net sales were 259.8 billion rupees.

Shares in Tata Motors rose 6.3 percent to close at 711.05 rupees, helped by the results and a change in income taxes in the federal budget that will put more disposable income in the hands of middle-income consumers, said Jatin Chawla, analyst with brokerage India Infoline.

Jaguar Land Rover turned profitable in the December quarter with a net profit of 4.17 billion rupees. ($90 million)

RECOVERY

Demand has started to pick up again and sales of JLR brands in the December quarter rose 28 percent to 56,700 units from the September quarter, with improvement in volumes coming mainly from North America, Europe and China, the company said.

In the last four months or so we have seen a strong recovery. Cost reductions are happening, and that is reflecting in the bottom line, said Vice Chairman Ravi Kant.

It's a big turnaround we are witnessing, and we hope to continue in this path in the future, he added.

Evoking memories of its former glory, Jaguar this month announced its return to classic race 24 hours of Le Mans this year with the Jaguar RSR XKR GT2, more than a decade since it last took part.

Tata Motors, whose mainstays are trucks and buses in India, also produces the Nano, billed as the world's cheapest car.

Last month, it reported a net profit of 4 billion rupees for its domestic operations in the December quarter on increased demand for its cars, trucks and buses.

Brokerage UBS, which has upgraded Tata Motors to a buy from sell said in a recent research note it had turned bullish on prospects of a significant turnaround at JLR and a growth in its domestic commercial vehicles business.

PROFIT AND PRICE RISE

Consolidated debt for Tata Motors stood at 231 billion rupees at the end of December 2009.

Sales in India, one of the world's fastest-growing markets, have been boosted by a better economic climate and a government stimulus from lower factory-gate duties on vehicles last year.

Tata Motors said it would pass on to customers the 2 percent rise in factory-gate duties announced in the annual budget, both for commercial vehicles and its cars.

Automobile sales in the country have risen an annual 24 percent in the first 10 months of 2009/10, with cars rising about 25 percent and trucks more than 30 percent.

The stock, valued at $7.7 billion, had risen 34 percent in the December quarter, outperforming the main index that climbed about 2 percent.

($1=46.2 rupees=0.66 pound)

(Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan and Will Waterman)

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