Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ASHOK LEYLAND
Ashok Leyland (AL) has seven manufacturing plants - the mother plant at Ennore
near Chennai, three plants at Hosur (called Hosur I and Hosur II, along with a
Press shop), the assembly plants at Alwar, Bhandara and state-of-the-art facility at
Pantnagar. The total covered space at these seven plants exceeds 650,000 sq m
and together employs over 11,500 personnel.
Investment Rationale
AL reported a good set of results for Q2FY12, driven by higher net average top
line to Rs.3,095cr, driven by an 18.7% yoy increase in its average net realization.
EBITDA margin came in at 10.7%, registering a decline of 58bp yoy; however, it
expanded by 128bp qoq, largely due to favorable operating leverage, better-thanexpected
realization and lower other expenditure.
Management has guided for modest industry volume growth of 5-6% in
FY2012. However, according to management, the company’s volumes are
expected to surpass 100,000 units in FY2012, with exports likely to report sales of
~13,000 units.
With interest rates expected to cool down from CY2012, we expect pick-up in
industrial activity, leading to a rebound in M&HCV sales. Thus, we expect Ashok
Leyland's volume growth to rebound in FY13E leading to higher revenues.
AL has entered into an agreement to form a JV with Nissan Motor Company
negligible presence in the LCV space, this partnership would be positive for AL in
the long run.
Despite the macroeconomic headwinds and a high base, the domestic MHCV
Truck segment has grown 8.9% YoY in H1FY12 aided by an increase in freight
rates. Ashok Leyland has underperformed the industry with a 10% decline in
volumes in the segment which is primarily attributable to the high base of
H1FY11. However, we expect a rebound in H2FY12 with good growth in MHCV
truck volumes and overall volumes.
Valuations
We expect demand to revive from CY12 with the likely easing of interest rates,
thereby helping AL to post robust volume growth in FY13E. At CMP, AL is
trading at 9.5x its FY2011 earnings. We recommend BUY with a target price of
Rs. 32 for a potential upside of 39%.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
ASHOK LEYLAND
Ashok Leyland (AL) has seven manufacturing plants - the mother plant at Ennore
near Chennai, three plants at Hosur (called Hosur I and Hosur II, along with a
Press shop), the assembly plants at Alwar, Bhandara and state-of-the-art facility at
Pantnagar. The total covered space at these seven plants exceeds 650,000 sq m
and together employs over 11,500 personnel.
Investment Rationale
AL reported a good set of results for Q2FY12, driven by higher net average top
line to Rs.3,095cr, driven by an 18.7% yoy increase in its average net realization.
EBITDA margin came in at 10.7%, registering a decline of 58bp yoy; however, it
expanded by 128bp qoq, largely due to favorable operating leverage, better-thanexpected
realization and lower other expenditure.
Management has guided for modest industry volume growth of 5-6% in
FY2012. However, according to management, the company’s volumes are
expected to surpass 100,000 units in FY2012, with exports likely to report sales of
~13,000 units.
With interest rates expected to cool down from CY2012, we expect pick-up in
industrial activity, leading to a rebound in M&HCV sales. Thus, we expect Ashok
Leyland's volume growth to rebound in FY13E leading to higher revenues.
AL has entered into an agreement to form a JV with Nissan Motor Company
negligible presence in the LCV space, this partnership would be positive for AL in
the long run.
Despite the macroeconomic headwinds and a high base, the domestic MHCV
Truck segment has grown 8.9% YoY in H1FY12 aided by an increase in freight
rates. Ashok Leyland has underperformed the industry with a 10% decline in
volumes in the segment which is primarily attributable to the high base of
H1FY11. However, we expect a rebound in H2FY12 with good growth in MHCV
truck volumes and overall volumes.
Valuations
We expect demand to revive from CY12 with the likely easing of interest rates,
thereby helping AL to post robust volume growth in FY13E. At CMP, AL is
trading at 9.5x its FY2011 earnings. We recommend BUY with a target price of
Rs. 32 for a potential upside of 39%.
This comment has been removed by a blog administrator.
ReplyDelete