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UBS Investment Research
Ashok Leyland
4Q-strong end to FY11
„ Event: 4QFY11 results: Sales ahead at Rs 38.3bn (+30%YoY)
Sales were ahead of our expectation at Rs.38.3bn (UBS-e:Rs 36.6bn) due to strong
volume growth of 61% qoq and 7% qoq increase in realizations (due to price
increase of ~2% in Jan’11 and improved mix). Revenue in defence business was up
50% YoY in Q4FY11.
„ Impact: In-line margins; no change to our estimates
EBITDA margin increased 40bps yoy to 13.3% mainly due to lower RM costs
(RM to sales down 110bps yoy) and other expense (other expense to sales down
110bps yoy), but was negatively impacted by increase in staff costs (staff costs to
sales up 170bps yoy). Dep. was higher at Rs.772m vs. Rs.588m in Q4FY10 due to
full year impact of Pantnagar plant vs 1month in Q4FY10.
„ Action: Reiterate Neutral; muted growth outlook
Mgmt. has guided: 1) industry vol. growth of 7-8% and 2) domestic and export vol.
growth of 10-15% and 20% resp. for the co in FY12. Mgmt. expects operating
margin of 10-10.5% for FY12; margins may have negative impact from increase in
proportion of U-Trucks (~25% of domestic truck volumes in FY12E). Management
expect to ramp up production from Pantnagar plant to 36,000 units in FY12. Mgmt.
guided capex of Rs.10-12bn in FY12 for which Co. will raise debt of ~Rs.6bn.
„ Valuation: Maintain Neutral, PT Rs 65
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a 12.5% WACC.
We add Rs3.0 on account of Leyland’s stake in IndusInd Bank.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Ashok Leyland
4Q-strong end to FY11
„ Event: 4QFY11 results: Sales ahead at Rs 38.3bn (+30%YoY)
Sales were ahead of our expectation at Rs.38.3bn (UBS-e:Rs 36.6bn) due to strong
volume growth of 61% qoq and 7% qoq increase in realizations (due to price
increase of ~2% in Jan’11 and improved mix). Revenue in defence business was up
50% YoY in Q4FY11.
„ Impact: In-line margins; no change to our estimates
EBITDA margin increased 40bps yoy to 13.3% mainly due to lower RM costs
(RM to sales down 110bps yoy) and other expense (other expense to sales down
110bps yoy), but was negatively impacted by increase in staff costs (staff costs to
sales up 170bps yoy). Dep. was higher at Rs.772m vs. Rs.588m in Q4FY10 due to
full year impact of Pantnagar plant vs 1month in Q4FY10.
„ Action: Reiterate Neutral; muted growth outlook
Mgmt. has guided: 1) industry vol. growth of 7-8% and 2) domestic and export vol.
growth of 10-15% and 20% resp. for the co in FY12. Mgmt. expects operating
margin of 10-10.5% for FY12; margins may have negative impact from increase in
proportion of U-Trucks (~25% of domestic truck volumes in FY12E). Management
expect to ramp up production from Pantnagar plant to 36,000 units in FY12. Mgmt.
guided capex of Rs.10-12bn in FY12 for which Co. will raise debt of ~Rs.6bn.
„ Valuation: Maintain Neutral, PT Rs 65
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a 12.5% WACC.
We add Rs3.0 on account of Leyland’s stake in IndusInd Bank.
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