Ashok Leyland Ltd., included within the yr 1948, is a Massive Cap firm (having a market cap of Rs 44194.36 Crore) working in Auto sector.
Ashok Leyland Ltd. key Merchandise/Income Segments embrace Industrial Automobiles, Spare Elements & Others, Sale of providers, Engine & Gensets, Ferrous Castings, Scrap, Export Incentives, Different Working Income for the yr ending 31-Mar-2022.
Financials
For the quarter ended 30-06-2022, the corporate reported a Consolidated Whole Revenue of Rs 7248.49 Crore, down -27.21 % from final quarter Whole Revenue of Rs 9957.95 Crore and up 76.65 % from final yr similar quarter Whole Revenue of Rs 4103.27 Crore. Firm reported internet revenue after tax of Rs 68.05 Crore in newest quarter.
Funding Rationale
In Q1, AL earnings got here in sharply beneath estimates at INR550mn (vs an estimate of INR1.4bn), primarily as a consequence of weaker-than-expected EBITDA margin at 4.4% (vs the estimate of 6.5%). Margin stress was pushed by excessive enter prices and an hostile combine. Whereas the brokerage continues to stay constructive on the CV cycle, our key rationale for remaining unfavourable on AL is as a result of it believes margin is unlikely to revert to the earlier peak for the CV trade this time, given: (1) a pointy rise in automobile costs which have occurred within the final two years, which has been tough to totally cross on and (2) aggressive depth stays excessive, as all of the three huge gamers purpose to achieve share. AL’s weaker-than-expected margin in Q1, regardless of seeing constructive demand momentum, additional re-emphasises thesis on sustained margin stress for the trade. It expects the earnings downgrade cycle to proceed in AL as margin is unlikely to revive to the earlier peak, which is being at the moment factored in by consensus. Reiterate SELL with a revised TP of INR 108 (earlier INR 102) because it rolls ahead to June2024E earnings (no change in earnings).
Promoter/FII Holdings
Promoters held 51.54 per cent stake within the firm as of 30-Jun-2022, whereas FIIs owned 15.03 per cent, DIIs 21.74 per cent.
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