Ashok Leyland BUYsmartinvestor.business-standard.com/BSCMS/PDF/ashokleyland_260… · Ashok Leyland (AL) reported below par performance for 1QFY2013 primarily on account of lower-than-expected

Please refer to important disclosures at the end of this report 1

Quarterly highlights (Standalone) Y/E March (` cr) 1QFY13 1QFY12 % chg (yoy) 4QFY12 % chg (qoq)

Net Sales 3,007 2,513 19.7 4,311 (30.2)

EBITDA 241 245 (1.6) 470 (48.8)

Adj. EBITDA margin (%) 8.0 9.7 (173)bp 10.9 (290)bp

Adj. PAT 67 86 (22.4) 259 (74.1)

Source: Company, Angel Research

Ashok Leyland (AL) reported below par performance for 1QFY2013 primarily on account of lower-than-expected net average realization (discounts higher by `10,000-`15,000/vehicle and higher share of Dost), high other expenditure (led by increase in advertising spends, power cost (up by `4cr) and forex loss of `7cr and higher interest expense (due to increase in debt levels). While, we broadly maintain our volume and revenue estimates, we revise our EBITDA margin estimates downwards for FY2013E/14E to factor in increasing contribution of Dost in product-mix and higher discounts in MHCV segment. Nonetheless, on account of attractive valuations, we maintain our Buy rating on the stock.

Disappointing 1QFY2013 performance: Net sales registered a strong 19.7% yoy growth to `3,007cr; however, it was below street expectations due to higher-than-expected decline (15.4% yoy and 9.7% qoq) in net average realization. Net average realization declined largely on account of higher discounts and increasing contribution (26% of total volumes vs. 14% in 4QFY2012) from the lower priced LCV Dost. Total volumes grew 43.1% yoy led by 48.1% qoq growth in Dost sales. EBIDTA margins declined 173bp yoy (290bp qoq) to 8.0% led by 210bp yoy (140bp qoq) increase in other expenditure. Other expenditure jumped 50.0% yoy primarily due to higher advertising and power costs and forex loss of `7cr. On the positiveside, raw-material expenses as a percentage of sales dipped 70bp yoy (160bp qoq) to 72.8%. Hence, operating profit declined 1.6% yoy (48.8% qoq) to `241cr. However, bottom-line declined by 22.4% yoy (74.1% qoq) to `67cr as interest expense surged 47.1% yoy (15.2% qoq) to `83cr.

Outlook and valuation: While the near term outlook for the MHCV industry remains challenging due to postponement in purchases by fleet operators amid slowdown in the economy; we expect AL to perform relatively better driven by pick-up in demand in Southern part of the country. At `23, AL is trading at attractive valuation of 8.2x its FY2014E earnings. We maintain our Buy rating on the stock with a target price of `30, valuing the stock at 11.0x its FY2014E EPS.

Key financials (Standalone) Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E

Net Sales 11,417 13,318 14,920 16,850

% chg 54.1 16.6 12.0 12.9

Net Profit 630 562 579 731

% chg 64.2 (10.8) 3.1 26.2

EBITDA (%) 10.6 9.4 9.0 9.3

EPS (`) 2.4 2.1 2.2 2.7

P/E (x) 9.5 10.7 10.4 8.2

P/BV (x) 2.3 2.1 1.9 1.7

RoE (%) 16.5 13.8 13.3 15.6

RoCE (%) 14.4 12.9 12.8 14.3

EV/Sales (x) 0.6 0.5 0.4 0.4

EV/EBITDA (x) 5.7 5.4 5.3 4.6 Source: Company, Angel Research

BUY CMP `23 Target Price `30

Investment Period 12 Months

Stock Info

Sector

Market Cap (` cr)

Net Debt (` cr)

Beta

52 Week High / Low

Avg. Daily Volume

Face Value (`)

BSE Sensex

Nifty

Reuters Code

Bloomberg Code

Shareholding Pattern (%)

Promoters 38.6

MF / Banks / Indian Fls 21.0

FII / NRIs / OCBs 30.1

Indian Public / Others 10.3

Abs. (%) 3m 1yr 3yr

Sensex (0.2) (10.7) 9.5

Ashok Leyland (27.3) (14.7) 25.8

AL@IN

Automobile

1.0

16,846

5,110

ASOK.BO

6,000

0.8

33/20

837,055

2,362

Yaresh Kothari 022-3935 7800 Ext: 6844

[email protected]

Ashok Leyland Performance Highlights

1QFY2013 Result Update | Automobile

July 25, 2012

Ashok Leyland | 1QFY2013 Result Update

July 25, 2012

2

Exhibit 1: Quarterly financial performance (Standalone) Y/E March (` cr) 1QFY13 1QFY12 % chg (yoy) 4QFY12 % chg (qoq) FY2012 FY2011 % chg (yoy)

Net Sales 3,007 2,513 19.7 4,311 (30.2) 12,842 11,177 14.9

Consumption of RM 1,935 1,736 11.5 3,026 (36.0) 8,954 7,899 13.4

(% of sales) 64.4 69.1 70.2 69.7 70.7 Staff costs 268 250 7.3 247 8.5 1,020 960 6.3

(% of sales) 8.9 9.9 5.7 7.9 8.6 Purchase of traded goods 253 75 236.9 183 38.1 507 273 85.6

(% of sales) 8.4 3.0 4.3 4.0 2.4 Other expenses 310 207 50.0 385 (19.5) 1,104 831 32.8

(% of sales) 10.3 8.2 8.9 8.6 7.4 Total Expenditure 2,767 2,268 22.0 3,841 (28.0) 11,586 9,963 16.3

Operating Profit 241 245 (1.6) 470 (48.8) 1,256 1,214 3.5

OPM (%) 8.0 9.7 10.9 9.8 10.9 Interest 83 57 47.1 72 15.2 255 189 35.1

Depreciation 89 85 5.4 96 (6.6) 353 267 31.9

Other income 13 7 72.9 11 18.3 40 44 (9.2)

PBT (excl. Extr. Items) 81 111 (26.9) 313 (74.1) 688 802 (14.1)

Extr. income/(expense) - - - - - - - -

PBT (incl. Extr. Items) 81 111 (26.9) 314 (74.3) 690 802 (13.9)

(% of sales) 2.7 4.4 7.3 5.4 7.2 Provision for taxation 14 24 (42.8) 56 (74.9) 124 171 (27.3)

(% of PBT) 17.3 22.1 17.7 18.0 21.3 Reported PAT 67 86 (22.4) 259 (74.1) 566 631 (10.3)

Adj PAT 67 86 (22.4) 259 (74.1) 566 631 (10.3)

Adj. PATM 2.2 3.4 6.0 4.4 5.6 Equity capital (cr) 266 266 266 266 266 Reported EPS (`) 0.3 0.3 (22.4) 1.0 (74.1) 2.1 2.4 (10.3)


Exhibit 2: 1QFY2013 – Actual vs. Angel estimates Y/E March (` cr) Actual Estimates Variation (%)

Net Sales 3,007 3,283 (8.4)

EBITDA 241 277 (13.1)

EBITDA margin (%) 8.0 8.4 (44)bp

Adj. PAT 67 106 (37.1)


Exhibit 3: Quarterly volume performance (units) 1QFY13 1QFY12 % chg (yoy) 4QFY12 % chg (qoq) FY2012 FY2011 % chg (yoy)

MHCV passenger 6,604 5,328 23.9 8,767 (24.7) 25,845 25,226 2.5

MHCV goods 13,302 13,755 (3.3) 21,731 (38.8) 67,408 68,007 (0.9)

LCV (ex. Dost) 431 194 122.2 297 45.1 1,172 873 34.2

Total volume (ex. Dost) 20,337 19,277 5.5 30,795 (34.0) 94,425 94,106 0.3

Dost 7,248 - - 4,893 48.1 7,593 - -

Total volume (incl. Dost) 27,585 19,277 43.1 35,688 (22.7) 102,018 94,106 8.4

Exports (inc. above ) 3,003 2,539 18.3 4,123 (27.2) 12,909 10,306 25.3



July 25, 2012

3

Lower-than-expected growth in top-line: AL reported strong net sales growth of 19.7% yoy (down 30.2% qoq) growth to `3,007cr; however, it was below street expectations due to 15.4% yoy (9.7% qoq) decline in net average realization. Net average realization declined largely on account of higher discounts (average discounts up `10,000-`15,000/vehicle to `65,000-`70,000/vehicle) and higher contribution (26% of total volumes vs. 14% in 4QFY2012) from the lower priced Dost vehicle. Volume performance was boosted by the newly launched LCV Dost which grew 48.1% qoq. While volumes in the MHCV goods segment declined by 3.0% yoy (38.8% qoq); MHCV passenger volumes jumped 23.9% yoy (down 24.7% qoq).

During 1QFY2013, total industry volumes in the MHCV segment declined by 12.0% yoy led by postponement in purchases by fleet operators amid slowdown in the economy. However, AL managed to regain some lost ground during the quarter due to gradual improvement in the southern markets. AL’s market share in the domestic MHCV segment improved from 23.1% in FY2012 to 26.0% at the end of 1QFY2013.

Exhibit 4: Volume growth driven by Dost


Exhibit 5: Net average realization down 15.4% yoy


Exhibit 6: Net sales driven by volume growth


Exhibit 7: Domestic market share trend

Source: Company, SIAM, Angel Research

178.2

72.0

14.3 15.0 (9.9) (3.9)

25.9 20.2 43.1

(50.0)

0.0

50.0

100.0

150.0

200.0

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1QFY

11

2QFY

11

3QFY

11

4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

(%)(units) Total volumes yoy chg (%)

(7.5)

0.0

7.2

13.9 17.4 18.7

3.5

(6.8)

(15.4)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1QFY

11

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11

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4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

(%)(`) Net average realisation yoy chg (%)

157.3

72.0

22.5 30.9

5.8 14.0

30.4 12.0

21.1

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

0 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

1QFY

11

2QFY

11

3QFY

11

4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

(%)(`cr) Net sales yoy chg (%)

35.741.4

48.945.1

39.7 40.442.9 43.5

39.1

25.3 24.9

15.6

24.619.2 21.1

17.822.3 22.7

27.0 27.6

20.4

27.222.2 23.7

21.025.5 26.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

1QFY

11

2QFY

11

3QFY

11

4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

(%) MHCV passenger MHCV goods Total MHCV


July 25, 2012

4

EBITDA margin down sharply to 8.0%: On the operating front, EBIDTA margins declined 173bp yoy (290bp qoq) to 8.0% led by 210bp yoy (140bp qoq) increase in other expenditure. Other expenditure jumped 50.0% yoy primarily due to higher advertising and power costs (up by `4cr due to increase in power tariff in Tamil Nadu) and forex loss of `7cr. On the positive side, raw-material expenses as a percentage of sales dipped 70bp yoy (160bp qoq) to 72.8%. Hence, operating profit declined 1.6% yoy (48.8% qoq) to `241cr.

Exhibit 8: EBITDA margins under pressure


Exhibit 9: Net profit down 22.4% yoy


Net profit down 22.4% yoy: Net profit at `67cr (down 22.4% yoy) was significantly lower than our estimates of `106 led by lower-than-expected top-line and sharp drop in operating performance. Further increase in interest expense by 47.1% yoy (15.2% qoq) due to higher working capital requirements also impacted the bottom-line performance. Higher contribution from the Pantnagar facility on a yoy basis led to a lower tax rate of 17.3% as against 22.1% in 1QFY2012.

10.0 11.3 7.5

13.2 9.7 10.7 7.2 10.9 8.0

73.9 73.6 73.2 72.8 72.9 73.5 75.9 75.8 74.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1QFY

11

2QFY

11

3QFY

11

4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

(%) EBITDA margin Raw material cost/sales

123 167 43 298 86 154 67 259 67

5.2 6.2

1.9

7.7

3.5

5.0

2.3

6.0

2.2

0.0

1.0

2.0

3.0

4.0

5.0

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0

50

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1QFY

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2QFY

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3QFY

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4QFY

12

1QFY

13

(%)(` cr) Net profit Net profit margin


July 25, 2012

5

Conference call – Key highlights

Management has indicated that the MHCV demand outlook has weakened in the past one month and it now expects the industry to register flat to negative growth in FY2013 from 3.0% growth expected earlier.

While the total industry volumes for MHCV have declined by ~12.0% in 1QFY2013, South India’s volumes have declined by only 4.5% yoy. The saving grace for the total industry is the demand for the bus segment which has grown by 20% yoy during the quarter driven by intermediate bus segment which grew by 42% yoy.

AL continues to witness strong demand for Dost which so far has been launched only in seven states in the country. Currently, Dost has order backlog of about three months. The installed capacity of Dost stands at ~50,000 units annually and the company intends to achieve volumes of ~32,000 units in FY2013. As per the management, Dost contributed `15cr to the company’s bottom-line during the quarter. However, it continues to incur losses in the books of the JV. Breakeven levels for the JV are pegged at ~50,000 units/ annum.

Spare parts revenue during 1QFY2013 stood at `218cr against `187cr in 1QFY2012. Engine volumes jumped 24.0% yoy to 4,312 units and revenues came in at `79cr (`64cr in 1QFY2012). Defense kit sales stood at ~800 units with revenues of `89cr. Management expects to sell 2,800-3,000 kits in FY2013.

Production at the Pantnagar plant stood at ~7,500 units during the quarter. The company now expects to produce ~28,000-30,000 vehicles at the Pantnagar plant in FY2013 from ~40,000 units planned earlier. The current production at the Pantnagar has fallen to ~2,000 units as the company has cut down the production in view of the weak demand scenario.

The company has lowered its capital expenditure guidance to `450cr for FY2013E from `600cr planned earlier. AL will now incur lower capex at its Pantnagar plant along with lower R&D and strategic sourcing spends.

AL is looking to ramp-up dealerships in North and South India.

The company’s debt levels as on June 30, 2012 stand at `4,500cr.


July 25, 2012

6

Investment arguments

Volume growth to benefit from easing of interest rates and recently launched Dost: MHCV demand has witnessed a slowdown in recent times due to high interest rates and slowdown in industrial activity; however, we believe MHCV demand is near its trough. With reversal in interest rates we expect pick-up in industrial activity, leading to a rebound in MHCV sales in FY2014. Further, recently introduced LCV - Dost (through JV with Nissan) have been received well by the markets and AL expects to ramp-up the production in FY2013E. As such we expect AL to register a strong ~17% volume CAGR over FY2012-14E.

EBITDA margin pressures to persist due to change in product-mix: While the raw-material prices have stabilized and AL continues to benefit from the ramp-up in production at Pantnagar facility (total profitability estimated to be higher due to cost savings of ~`60,000/vehicle); the product-mix is set to change due to increasing proportion of lower margin LCV Dost (contribution to total volumes to increase from ~7% in FY2012 to ~24% in FY2013E). AL has indicated that it earns marketing/distribution fees of `15,000-`18,000/vehicle on Dost sales and expects margins to be impacted by ~50bp going ahead.

Outlook and valuation

While, we broadly maintain our volume and revenue estimates, we revise our EBITDA margin estimates downwards for FY2013E/14E to factor in increasing contribution of Dost in product-mix and higher discounts in MHCV segment.

Exhibit 10: Change in estimates Y/E March Earlier Estimates Revised Estimates % chg

FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E

Net Sales (` cr) 14,798 16,687 14,920 16,850 0.8 1.0

OPM (%) 9.6 9.6 9.0 9.3 (60)bp (26)bp

EPS (`) 2.4 3.0 2.2 2.7 (10.2) (7.6)


While the near term outlook for the MHCV industry remains challenging due to postponement in purchases by fleet operators amid slowdown in the economy; we expect AL to perform relatively better driven by pick-up in demand in Sothern part of the country. Further, the recently launched Dost LCV which has so far being launched only in seven states continues to drive the overall volume growth of the company. We believe that the momentum in the Dost volumes will continue going ahead and will account for ~25% (~7% in FY2012) of AL’s overall volumes by FY2014E.

At `23, AL is trading at attractive valuations of 8.2x its FY2014E earnings. We maintain our Buy rating on the stock with a target price of `30, valuing the stock at 11x its FY2014E earnings.


July 25, 2012

7

Exhibit 11: Key assumptions

(units) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

MHCV passenger 19,981 18,481 25,226 25,845 28,430 31,272

MHCV goods 33,071 44,345 68,007 67,408 67,408 72,801

LCV (ex. Dost) 1,379 1,100 873 1,172 1,406 1,547

Dost - - - 7,593 30,000 34,500

Total volume (units) 54,431 63,926 94,106 102,018 127,244 140,120

% yoy chg (34.7) 17.4 47.2 8.4 24.7 10.1

Domestic 47,619 57,947 83,800 89,109 112,399 123,048

Exports 6,812 5,979 10,306 12,909 14,845 17,072


Exhibit 12: Angel vs. consensus forecast

Angel estimates Consensus Variation (%)

FY13E FY14E FY13E FY14E FY13E FY14E

Total op. income (` cr) 14,920 16,850 14,526 16,449 2.7 2.4

EPS (`) 2.2 2.7 2.5 3.0 (12.5) (8.4)

Source: Bloomberg, Angel Research

Exhibit 13: One-year forward P/E band


Exhibit 14: One-year forward P/E chart


Exhibit 15: One-year forward EV/EBITDA band


Exhibit 16: One-year forward EV/EBITDA chart


0

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July 25, 2012

8

Exhibit 17: Automobile - Recommendation summary

Company Reco. CMP (`)

Tgt. price (`)

Upside (%)

P/E (x) EV/EBITDA (x) RoE (%) FY12-14E EPS

FY13E FY14E FY13E FY14E FY13E FY14E CAGR (%)

Ashok Leyland Buy 23 30 34.1 10.4 8.2 5.3 4.6 13.3 15.6 14.1

Bajaj Auto Accumulate 1,562 1,698 8.8 14.4 12.9 9.6 8.0 46.1 41.3 6.7

Hero MotoCorp Buy 2,032 2,428 19.5 14.6 13.4 8.5 7.2 54.6 44.3 12.9

Maruti Suzuki Buy 1,103 1,364 23.7 15.5 12.1 9.8 7.2 12.8 14.4 26.8 Mahindra & Mahindra Buy 682 824 20.9 14.3 12.8 8.5 7.2 21.3 20.5 6.3

Tata Motors Buy 213 305 43.1 5.2 4.9 3.3 3.1 36.0 33.1 9.1

TVS Motor Accumulate 38 42 11.0 7.9 7.2 3.3 2.8 18.2 17.9 0.0


Company background

Ashok Leyland (AL) is the country's second largest CV manufacturer. The company has a strong presence in the MHCV segment, with a domestic market share of ~23% as of FY2012. AL enjoys a dominant position in southern India, with a ~48% market share, and is currently focusing on expanding its presence in northern India by increasing its touch points in the region. The company, through its JV with Nissan Motor and John Deere, intends to expand its product portfolio and has recently launched new vehicles Dost (to tap the growing LCV demand) and Backhoe Loader (construction equipment segment), respectively.


July 25, 2012

9

Profit and loss statement (Standalone)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Total operating income 6,098 7,407 11,417 13,318 14,920 16,850

% chg (23.1) 21.5 54.1 16.6 12.0 12.9

Total expenditure 5,642 6,648 10,203 12,062 13,577 15,276

Net raw material costs 4,480 5,212 8,175 9,464 10,667 12,014

Other mfg costs 132 135 235 275 336 371

Employee expenses 563 667 975 1,036 1,171 1,331

Other 467 634 819 1,286 1,402 1,560

EBITDA 456 760 1,214 1,256 1,343 1,574

% chg (43.5) 66.6 59.8 3.5 6.9 17.2

(% of total op. income) 7.5 10.3 10.6 9.4 9.0 9.3

Depreciation & amortization 178 204 267 353 375 398

EBIT 278 555 946 903 968 1,176

% chg (56.0) 100.1 70.4 (4.5) 7.1 21.5


Interest and other charges 160 102 189 255 310 326

Other income 91 91 44 42 49 53

(% of PBT) 46.3 18.1 5.6 6.1 6.9 5.8

Recurring PBT 208 545 802 690 707 903

% chg (67.3) 161.3 47.2 (13.9) 2.4 27.8

Extraordinary income/(exp.) 11 40 2 4 - -

PBT 197 505 800 686 707 903

Tax 18 121 171 124 127 172

(% of PBT) 9.4 24.0 21.3 18.1 18.0 19.0

PAT (reported) 190 424 631 566 579 731

ADJ. PAT 179 384 630 562 579 731

% chg (60.3) 114.6 64.2 (10.8) 3.1 26.2


Basic EPS (`) 0.7 1.6 2.4 2.1 2.2 2.7

Adj. EPS (`) 0.7 1.4 2.4 2.1 2.2 2.7

% chg (60.3) 114.6 64.2 (10.8) 3.1 26.2


July 25, 2012

10

Balance sheet statement (Standalone)


SOURCES OF FUNDS

Equity share capital 133 133 133 266 266 266

Reserves & surplus 3,341 3,536 3,830 3,942 4,212 4,634

Shareholders’ Funds 3,474 3,669 3,963 4,208 4,478 4,900

Total loans 1,958 2,280 2,348 2,395 2,895 3,045

Deferred tax liability 263 385 444 490 490 490

Other long term liabilities - - - 4 4 4

Long term provisions - - 78 77 77 77

Total Liabilities 5,695 6,334 6,833 7,174 7,944 8,516

APPLICATION OF FUNDS

Gross block 4,939 6,019 6,692 7,256 7,714 8,182

Less: Acc. depreciation 1,540 1,769 2,058 2,343 2,718 3,116

Net Block 3,399 4,250 4,634 4,914 4,996 5,066

Capital work-in-progress 998 561 358 548 540 573

Goodwill - - - - - -

Investments 264 326 1,230 1,534 1,589 1,618

Long term loans and advances - - 385 608 608 608

Other noncurrent assets - - 3 7 7 7

Current assets 3,166 4,152 3,984 4,304 4,991 5,855

Cash 88 519 180 33 152 263

Loans & advances 790 973 431 810 895 1,011

Other 2,288 2,660 3,373 3,461 3,944 4,580

Current liabilities 2,141 2,961 3,760 4,742 4,788 5,211

Net current assets 1,025 1,191 224 (438) 203 644

Misc. exp. not written off 10 5 - - - -

Total Assets 5,695 6,334 6,833 7,174 7,944 8,516


July 25, 2012

11

Cash flow statement (Standalone)


Profit before tax 208 545 802 690 707 903

Depreciation 178 204 267 353 375 398

Change in working capital (785) 264 628 518 (522) (329)

Others (18) 289 (891) (275) - -

Other income (91) (91) (44) (42) (49) (53)

Direct taxes paid (18) (121) (171) (124) (127) (172)

Cash Flow from Operations (526) 1,090 591 1,120 384 747

(Inc.)/Dec. in fixed assets (2,466) (643) (470) (755) (450) (500)

(Inc.)/Dec. in investments 346 (63) (904) (304) (54) (29)

Other income 91 91 44 42 49 53

Cash Flow from Investing (2,028) (614) (1,329) (1,017) (455) (477)

Issue of equity - - - - - -

Inc./(Dec.) in loans 1,071 322 68 47 500 150

Dividend paid (Incl. Tax) 234 156 233 309 309 309

Others 519 (523) 97 (606) - -

Cash Flow from Financing 1,823 (45) 398 (250) 191 (159)

Inc./(Dec.) in cash (731) 430 (340) (147) 119 111

Opening Cash balances 451 88 519 180 33 152

Closing Cash balances 88 519 180 33 152 263


July 25, 2012

12

Key ratios

Y/E March FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Valuation Ratio (x) P/E (on FDEPS) 33.6 15.6 9.5 10.7 10.4 8.2

P/CEPS 16.3 10.2 6.7 6.6 6.3 5.3

P/BV 2.8 2.6 2.3 2.1 1.9 1.7

Dividend yield (%) 2.2 3.3 4.4 4.4 4.4 4.4

EV/Sales 1.1 0.9 0.6 0.5 0.4 0.4

EV/EBITDA 16.7 9.8 5.7 5.4 5.3 4.6

EV / Total Assets 1.3 1.2 1.0 1.0 0.9 0.8

Per Share Data (`)

EPS (Basic) 0.7 1.4 2.4 2.1 2.2 2.7

EPS (fully diluted) 0.7 1.4 2.4 2.1 2.2 2.7

Cash EPS 1.4 2.2 3.4 3.4 3.6 4.2

DPS 0.5 0.8 1.0 1.0 1.0 1.0

Book Value 7.9 8.8 10.0 10.9 11.9 13.5

Dupont Analysis

EBIT margin 4.6 7.5 8.3 6.8 6.5 7.0

Tax retention ratio 0.9 0.8 0.8 0.8 0.8 0.8

Asset turnover (x) 1.7 1.7 2.3 2.4 2.4 2.5

ROIC (Post-tax) 7.1 9.7 15.2 13.2 12.9 14.2

Cost of Debt (Post Tax) 10.2 3.7 6.4 8.8 9.6 8.9

Leverage (x) 0.3 0.4 0.3 0.2 0.2 0.2

Operating ROE 6.3 12.2 17.9 14.2 13.6 15.5

Returns (%)

ROCE (Pre-tax) 6.2 9.2 14.4 12.9 12.8 14.3

Angel ROIC (Pre-tax) 6.5 12.4 17.7 15.5 14.9 16.9

ROE 6.4 10.7 16.5 13.8 13.3 15.6

Turnover ratios (x)

Asset Turnover (Gross Block) 1.5 1.4 1.8 1.9 2.0 2.1

Inventory / Sales (days) 76 73 61 61 62 63

Receivables (days) 40 49 35 33 35 37

Payables (days) 114 110 95 105 106 103

WC cycle (ex-cash) (days) 33 40 11 (6) (5) 5

Solvency ratios (x)

Net debt to equity 0.5 0.4 0.2 0.2 0.3 0.2

Net debt to EBITDA 3.5 1.9 0.8 0.7 0.9 0.7

Interest Coverage (EBIT / Int.) 1.7 5.5 5.0 3.5 3.1 3.6


July 25, 2012

13

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com DISCLAIMER This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

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Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Ashok Leyland

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) Reduce (-5% to 15%) Sell (< -15%)

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Documents

Ashok Leyland BUYsmartinvestor.business-standard.com/BSCMS/PDF/ashokleyland_260… · Ashok Leyland (AL) reported below par performance for 1QFY2013 primarily on account of lower-than-expected