Ashok Leyland (ALL) reported a better-than-expected QFY20 operational performance amid challenging volume scenario. Standalone revenues at Rs. 3,838 crore were down 56.6% YoY, with ASPs rising 1.3% YoY, 17% QoQ to Rs. 15.1 lakh/unit. Total CV sales volumes in Q4FY20 were at 25,490 units (down 57% YoY), with LCV to MHCV mix at 34:66 vs. 42:58 in the previous quarter. Reported EBITDA margins at 4.8% were down 84 bps QoQ despite 240 bps gross margin expansion amid 390 bps rise in employee costs on percentage of sales basis. ALL reported loss at PAT level to the tune of Rs. 57 crore, largely tracking impairment charges on equity investments.
Valuation & Outlook
For ALL, muted volume outlook is also expected to weigh on margins in FY21E, with recovery on both fronts pushed back to FY22E at the earliest Consequently, return metrics are also expected to be subdued (<10%) till FY22E. We assign HOLD rating to ALL, valuing it at Rs. 58 (SOTP; 10x FY22E CV EV/EBITDA, 1.5x P/B for investments).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AshokLeyland_Q4FY20.pdf
Shares of ASHOK LEYLAND LTD. was last trading in BSE at Rs.52.35 as compared to the previous close of Rs. 53.55. The total number of shares traded during the day was 4435722 in over 16334 trades.
The stock hit an intraday high of Rs. 55.5 and intraday low of 51. The net turnover during the day was Rs. 236153602.