Ashok Leyland (AL IN) - Soft revenue growth in seasonally weak quarter - Earnings Update - CSEC Research

- In 1QFY18, Ashok Leyland's revenues came in at INR 42.4bn, down 0.5%YoY. Total volumes declined by 8.6% YoY, while realization grew by 8.9% YoY. Revenue decline was partly supported by price hike and robust growth in non-vehicular revenue.

- EBITDA margin declined by 400 bps YoY to 7.2%, impacted by higher commodity prices, adverse product mix, wage hike and marketing expenses. Adjusted PAT declined 47.5% YoY to INR 1.2bn due to exchange loss and impairment loss.

- Management expects margin to improve in the next quarter on the back of price hike and better volume. For FY18, Management indicated double digit margin.

Valuation: At CMP, the stock is trading at P/E of 18.8X FY2019E based on consensus estimates. Based on consensus target price of INR 108, we arrive at P/E of 19.0 of FY19EPS and rate the stock as MARKETPERFORMER. Risks: Increase in discounts, rise in interest rates and commodity prices.

Shares of ASHOK LEYLAND LTD. was last trading in BSE at Rs.106.15 as compared to the previous close of Rs. 104.9. The total number of shares traded during the day was 726975 in over 2827 trades.

The stock hit an intraday high of Rs. 106.5 and intraday low of 105. The net turnover during the day was Rs. 76907474.

Source : Equity Bulls

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