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Ashok Leyland, in a seasonally strong 4Q quarter, surprised us by 20% on EBITDA through
better sales (11%) and margins (100bp). Net D:E of 0.6 and dividend yield of 4% cushion the
stock. However, the pending diesel price hike in a fast rising interest rate environment puts risk to
our EPS estimate.
Impressive EBITDA performance from seasonally strong 4Q
Sales up 30.3% yoy and 72% qoq to Rs38.3bn. RBS est Rs34.7bn. Surprise by 11%, due to
12.7% qoq rise in net sales realisation per vehicle to Rs1.29m.
EBIDTA up 34.7% yoy and 165% qoq to Rs5.1bn. RBS est Rs4.2bn, surprised by 20%.
Raw material to net sales eased 110bp qoq and yoy to 72.1%.
EBIDTA margin up 40bp yoy @ 13.3% vs our est of 12.3%.
Interest rate down 5% qoq to Rs451m.
PBT up 30.6% yoy to Rs3.9bn as compared to RBS est of Rs3.35bn.
Tax rate 23.9% vs RBS est of 20%.
PAT up 34% yoy and quadrupled qoq to Rs2.98bn as compared to RBS est of Rs2.68bn.
EPS for the quarter is Rs2.2 and for FY11 Rs4.94.
Dividend of Rs2 per share was announced.
Management contact highlights
The strong sales realisation growth was driven by improved defence kit sales (40% of fullyear
value executed in 4Q) and higher proportion of tractor trailer sales.
The product mix shift also helped in raw material savings for the quarter.
Sharp increase in employee cost qoq of 38.5% was driven by bonus provision for good
performance of FY11, which is one-time on an annual basis.
Gross debt as per plan was reduced from peak of Rs30bn in Dec to Rs25.7bn.
Management guides for 12% sales volume growth for FY12F vs industry growth of 8%.
However, considering weak start in April and fast rising interest rate environment, we feel
there is risk to volume growth (RBS est 12%).
Quarterly EBITDA margin volatility will be high in coming quarters, but management expects
to improve from FY11 level of 11.2%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ashok Leyland, in a seasonally strong 4Q quarter, surprised us by 20% on EBITDA through
better sales (11%) and margins (100bp). Net D:E of 0.6 and dividend yield of 4% cushion the
stock. However, the pending diesel price hike in a fast rising interest rate environment puts risk to
our EPS estimate.
Impressive EBITDA performance from seasonally strong 4Q
Sales up 30.3% yoy and 72% qoq to Rs38.3bn. RBS est Rs34.7bn. Surprise by 11%, due to
12.7% qoq rise in net sales realisation per vehicle to Rs1.29m.
EBIDTA up 34.7% yoy and 165% qoq to Rs5.1bn. RBS est Rs4.2bn, surprised by 20%.
Raw material to net sales eased 110bp qoq and yoy to 72.1%.
EBIDTA margin up 40bp yoy @ 13.3% vs our est of 12.3%.
Interest rate down 5% qoq to Rs451m.
PBT up 30.6% yoy to Rs3.9bn as compared to RBS est of Rs3.35bn.
Tax rate 23.9% vs RBS est of 20%.
PAT up 34% yoy and quadrupled qoq to Rs2.98bn as compared to RBS est of Rs2.68bn.
EPS for the quarter is Rs2.2 and for FY11 Rs4.94.
Dividend of Rs2 per share was announced.
Management contact highlights
The strong sales realisation growth was driven by improved defence kit sales (40% of fullyear
value executed in 4Q) and higher proportion of tractor trailer sales.
The product mix shift also helped in raw material savings for the quarter.
Sharp increase in employee cost qoq of 38.5% was driven by bonus provision for good
performance of FY11, which is one-time on an annual basis.
Gross debt as per plan was reduced from peak of Rs30bn in Dec to Rs25.7bn.
Management guides for 12% sales volume growth for FY12F vs industry growth of 8%.
However, considering weak start in April and fast rising interest rate environment, we feel
there is risk to volume growth (RBS est 12%).
Quarterly EBITDA margin volatility will be high in coming quarters, but management expects
to improve from FY11 level of 11.2%.
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