Thursday, August 13, 2020

Ashok Leyland - Result Analysis Q1 FY21

Ashok Leyland - Result Analysis Q1 FY21


CMP: 61.75 (As on 13-08-2020)

Revenue from operations 1,486 Crs 
6,588 Cr (-77.42%) YoY | 5,088 Cr (-70.78%) QoQ 

Year ending revenue: 21,951 Cr Vs. 33,197 Cr (-33.86%)

Net Profit of (388.82) Cr 
274.9 Cr (-241.31%) YoY 57.8 Cr (-780.13%) QoQ 

Year ending Net profit: 460 Cr Vs. 2,079 Cr (-77.84%)

EPS (in Rs.) (1.39)
0.84 YoY | 0.06 QoQ 

Year ending EPS: 1.15 Vs. 7.08

View: Result is declined and below expectation. YoY and QoQ revenue significantly down and company also posted heavy losses in this quarter. EBITDA losses also in this quarter. Automobile sector which was already facing Economic stress now Covid-19 impact is giving double Whammy now. 

Business Updates & Highlights:

EBITDA in Q1FY21 was around INR 121.3 Cr Vs. 1,232.4 Cr in Q1FY20 Vs. 705 Cr in Q4FY20 therefore declined by 90% in YoY and 82% in QoQ. EBITDA margin in Q1FY21 was around 8.1% Vs. 18.7% in YoY Vs. 13.8% in QoQ. 

Financial

ROE and ROCE is around 25% and 17% respectively and book value per share is around INR 26 and share is currently trading at 2x of its book value. Promoter holding in the company is around 51.5% which is strong and stable. FIIs and mutual fund hold around 15.6% and 8.6% respectively which was declined by more than 1% by both mutual fund and FIIs. 

Position: Share strong support price is INR 45. Long term investor based on their risk appetite can continue with the company. 

Share View: Share price high 88 (52 week) and now 52. Company is one of India's major manufacturers of commercial vehicles, rolling out multi-axle trucks and tractor trailers, as well as light trucks and buses, emergency, and military vehicles. Ashok Leyland touts its 18- to 82-seater double-decker buses, popular for moving India's metro public.

Opportunities
During the quarter the Company successfully introduced its AVTR Range of Modular Vehicles in the Heavy Commercial Vehicle segment as also a completely differentiated Intermediate Commercial Vehicle range of vehicles. The BS VI “MidNox” technology of the Company provides superior “Fluid Efficiency”. Both the AVTR range and “Mid-Nox” have been received very well by customers. With virtually no operations or revenues in the first part of this quarter owing to the lock down, the demand is seen to be gradually opening up as the lock down is being eased. Being part of the Hinduja Group, ALL’s long track record of operations with strong brand image & wide distribution network with pan-India presence, its presence in all sub-segments of the CV (Commercial Vehicles) segment with strong market position in the domestic M&HCV (Medium & Heavy Commercial Vehicles) segment, improving market share of LCV (Light Commercial Vehicles) segment and continuation of comfortable leverage levels. Over the years, ALL has become a synonymous name in the bus segment, wherein it is one of the market leaders with vehicles ranging from 19 to 80 seats. 

Risk
In the backdrop of coronavirus pandemic led economic slowdown and resultant impact on the financial performance of the company in FY21. Amid the stressed ecosystem, recovery in demand for CV industry could take longer than expected in turn resulting in moderation in profits for ALL. Continuation of negative growth in the sales volume beyond Q2FY21. Deterioration of capital structure on a sustained basis. Due to various factors including slowdown in GDP growth on account of impact of COVID-19, transition from BS 4 to BS 6 and expected increase in prices of BS 6 models, sales volume growth for the industry is expected to remain subdued in FY21.

Sources: Various publications

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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