ashok leyland ltd - moneycontrol.comstatic-news.moneycontrol.com/.../06/ashok-leyland...ashok...

Ashok Leyland Ltd

RESULT UPDATE 27th May, 2019

2Page

Result highlights

• Ashok Leyland Limited (ALL), Net Sales for Q4FY19 stood at INR 8,846 Cr which was up by 1% Y-o-Y and 40% Q-o-Q. Therevenue was in line with our estimates of INR 8,602 Cr.

• EBIDTA of the company stood at INR 986 Cr declined by 12% y-o-y, it was in line with our estimates. EBIDTA margins stood at11.14% which is down 168bps as against 12.82% in Q4FY18. Employee cost increased by 25% YoY and Raw material cost increasedby 26% YoY.

• PAT came in at INR 653 Cr which was down by 12% Y-o-Y, PAT Margin stood at 7.38% for Q4FY19.

• The boards of directors have recommended a dividend of Rs. 3.10 per equity share of Rs. 1 for the year ended March 31, 2019,subject to shareholders approval.

Ashok Leyland LtdCMP

INR 91 Target

INR 111 Potential Upside

22%Market Cap (INR Mn)

267,720Recommendation

BUYSectorAuto & Ancillary

India Equity Institutional Research II Result Update – Q4FY19 II 27th May, 2019

Shares outs (Mn) 2935

Equity Cap (INR Mn) 2936

Mkt Cap (INR Mn) 267720

52 Wk H/L (INR) 152/78

Volume Avg (3m K) 26277

Face Value (INR) 1

Bloomberg Code AL IN

MARKET DATA

SENSEX 39749

NIFTY 11929

MARKET INFO

Particulars (INR Cr) FY18 FY19 FY20E FY21E

Net Sales 26247 29055 33948 35123

EBITDA 2739 3145 3799 3864

APAT 1543 1983 2160 2170

EPS 5.34 6.82 7.38 7.44

EBITDA Margin % 10.43 10.8 11.2 11.0

NPM 5.97% 5.95% 6.87% 6.42%

KEY FINANCIALS

Source: Company, KRChoksey Research

Particulars Mar 19 Dec 18 Sep 18

Promoters 51.12 51.12 51.12

FIIs 19.06 21.9 22.86

DIIs 10 9.11 9.91

Others 19.84 17.88 16.12

Total 100 100 100

SHARE HOLDING PATTERN (%)

“Stable Outlook on back of BSVI emission norms”

SHARE PRICE PERFORMANCE LCV outperformed in volumes; M&HCV growth remained flattish

Volumes during the quarter in total LCV segment grew by 8.33% YoY to 15,502 units andTotal M&HCV volumes were slightly declined by 0.91% to 44,019. Whereas domesticM&HCV volumes grew by 1% to 41519 units, Q4FY19 M&HCV market share was up at36.9% as against 35.1% last year. On full year basis total M&HCV sales volumes were up by8% to 1,42,863 units and LCV sales increased by 25% to 54,508. Company is alsostrengthening its position in LCV by planning to enter 5 to 7.5 tonne of LCV under itsproject phoenix and it expects to launch by next year. The project phoenix will fill thegap between 5 to 7.5 tonnes category to help company in better offering.

Reported double-digit EBITDA margin

In Q4FY19, Company reported EBIDTA margins of 11.14% which is down 168bps as against12.82% in Q4FY18. Decline in EBITDA margin was mainly on account of increasing rawmaterial prices and higher discounts during the quarter. Despite of offering discountscompany maintained its EBITDA margins in double digit range. Going forward we expectthis trend to remain as company is taking necessary operational steps to maintains itsmargins.

Valuations & Outlook:

We expect, volumes growth to kick in from Q2FY20 on implementation of BSVI emissionnorms & with focus on cost optimization EBITDA margins to remain intact. Company isalso increasing its focus on exports, LCV segment, modular business which will reducethe dependence on cyclicality. We assign a P/E multiple of 16x to the FY20 estimated EPSof INR 7.38 to arrive at a target price of INR 111, an upside of 22% over the CMP.We assign a “BUY” rating to the stock.

Phone: +91-22-6696 5555 / Fax: +91-22-6691 9576www.krchoksey.com

KRChoksey Researchis also available on Bloomberg KRCS<GO>

Thomson Reuters, Factset and Capital IQ

ANALYSTPraveen Motwani, [email protected], +91-22-6696 5421

Implementation of BSVI to support volume growth in FY20

Company foresee pre buying taking place from Q2 & Q3 FY20 onwards, which will likelysupport volume growth in FY20. Company is expecting Total Industry Volumes growthin between 10-12% for FY20. With stable government in place, we expect implementationof scrappage policy to play an important role post FY20.

Capex plan remains intact for FY20 & FY21

Planned capex of INR 1500 cr for FY20 & Rs 1000-1500 Cr for FY21, fund will get deploytowards, LCV project, modular business, R&D and BS-VI implementation. So far in FY19company has done capex of Rs. 950 Cr.

0

50

100

150

200

May

-16

No

v-16

May

-17

No

v-17

May

-18

No

v-18

May

-19

Ashok Leyland Ltd Sensex

3Page

Ashok Leyland LtdKey Con-call Highlights:

1) Double digit EBITDA margin during the quarter was on account of efficient cost management. 2) INR 700 Cr of net cash on balancesheet 3) Well on course for BSVI implementation & Outcome for current year looks robust and more positive 4) Company is expectingTotal industry growth in between 10-12%, and with stable government in place company is expecting reform push, infra push andpossible of scrappage policy come into place. 5) With BSVI implementation in April 2020, company foresee pre buy happening in thisfinancial year. 6) The domestic MHCV industry volumes for Q4 is 112469 vs. 117603 marginal lower due to base effect . Ashok Leylandvolumes were higher by 1% to 41519. Q4FY19 M&HCV market share was up at 36.9% as against 35.1% last year. 7) Revenue during thequarter was flattish and margins pressure was due to discounting which took place in the industry and resulted in pressure in toplinein terms of net realisations. 8) In last 12 months steel prices were consistently increasing and company had cumulative cost pressurein Q4FY19. 9) Defence revenue were lower than last year. 10) On full year bases revenue increased by 10% to Rs 29055 Cr against Rs26356 Cr during same period the last year. 11) EBITDA was 10.8% marginally lower compare to last year and market share 33.89% vs34.2% last year, going forward focus will on growing volumes and market share and same time keeping eye on bottomline as well.12) Dealer Inventory are about 20 days. 13) Currently export side of the business not doing good as many of existing market facingsome issue. Going forward new range of products are out and LCV partner which was launched in middle east. Looking to penetrateexisting market and looking for new market. 14) Company has planned capex of INR 1000-1500 Cr for FY20.







Particulars (INR Crs) Q4FY19 Q3FY19 Q4FY18 Q-o-Q Y-o-Y

Revenue from operations 8846 6325 8780 40% 1%

Cost of material consumed 5159 5319 4092 -3% 26%

Purchase of stock in trade 191 211 189 -9% 1%

(Increase) / Decrease in Stocks 1079 -1094 1966 -199% -45%

Employee Cost 573 500 459 15% 25%

Other Expenses 858 740 948 16% -9%

EBITDA 986 649 1126 52% -12%

EBITDA Margins (%) 11.14% 10.27% 12.82% 87bps -168bps

Depreciation 160 161 157 -1% 1%

EBIT 826 489 968 69% -15%

Exceptional Items -12 -6 -4 92% 166%

Other Income 9 21 59 -56% -85%

EBIT 823 503 1023 63% -20%

Interest 17 19 24 -13% -32%

PBT 807 484 999 67% -19%

Tax 153 103 263 49% -42%

Net Profit from ordinary activity after tax 653 382 736 71% -11%

Share of profit after tax of associate 0 -1 7 -103% -100%

PAT 653 381 743 72% -12%

PAT Margin% 7.38% 6.02% 8.46% 136bps -108bps

EPS (as reported) 2.22 1.30 2.54 71% -13%

Exhibit 1 : Quarterly Result

3,7

09

3,2

38 4

,53

4

4,2

03

4,2

28 5,1

41

5,3

52

4,4

03

4,1

98 5,0

47

4,9

54

5,5

01

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Jan-19

Feb-19

Mar-19

Total LCV volume trend (No. units)

8,9

68

10

,42

1

11

,25

8

10

,99

6

13

,15

8

14

,23

3

9,7

97

8,7

18

11

,29

5

14

,69

4

13

,29

1

16

,03

4

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Jan-19

Feb-19

Mar-19

Total M&HCV Volume trend (No. units)

Source: Company, KRChoksey Research Source: Company, KRChoksey Research

4PageIndia Equity Institutional Research II Result Update – Q4FY19 II 27th May, 2019

Ashok Leyland Ltd

Exhibit 2: Income Statement


Exhibit 3 : Balance Sheet


Key Financials





Particulars (INR Crs) FY 18 FY 19 FY20E FY21E

Net Sales 26247 29055 33948 35123

Total Operating Expenditure 23509 25910 30149 31260

EBIDTA 2739 3145 3799 3864

Less: Depreciation & Amortization 555 621 744 879

EBIT 2184 2524 3055 2985

Interest Paid 131 70 54 43

Non-operating Income 190 110 120 125

Profit Before tax 2243 2564 3120 3066

Tax 668 513 890 889

Adj. Net Profit 1543 1983 2160 2170

Particulars (INR Crs) FY 18 FY 19 FY20E FY21E

Liabilities

Equity Capital 293 294 294 294

Reserves & Surplus 6872 8039 9321 10526

Equity 7165 8332 9614 10819

Preference Share Capital 0 0 0 0

Net Worth 7165 8332 9614 10819

Total Loans 516 398 318 238

Capital Employed 8438 9534 10850 12163

Assets

Net Block 4688 4805 5773 6394

Capital WIP 213 275 336 396

Investments 5803 2637 2840 3000

Current Assets

Inventories 1710 2684 2604 3512

Sundry Debtors 980 2506 2122 2066

Cash and Bank Balance 1004 1373 2021 2684

Loans and Advances 1120 1622 1426 1475

Total Current Assets 4815 8185 8173 9738

Less: Current Liabilities & Provisions

Sundry Creditors 4659 6605 6097 6707

Provisions 616 803 849 878

Other Current Liabilities 403 407 0 0

Total Current Liabilities & Provisions 5678 7815 6945 7585

Capital Applied 8438 9534 10850 12163

5Page

Ashok Leyland Ltd


Exhibit 4: Cash flow statement

Exhibit 5: Ratio Analysis


Particulars FY18 FY19 FY20E FY21E

EBIDTA Margin 10.43 10.8 11.2 11.0

PAT Margin 5.97% 5.95% 6.87% 6.42%

D/E Ratio 0.07 0.05 0.03 0.02

ROE% 23.52% 25.75% 24.29% 21.31%

ROCE% 23.51 20.93% 20.09% 17.90%






Particulars (INR Crs) FY 18 FY19E FY20E FY21E

Net Cash Generated From Operations 5418 (873) 3102 2787

Net Cash Flow from/(used in) Investing Activities (3332) 2154 (1171) (842)

Net Cash Flow from Financing Activities (1966) (901) (1274) (1282)

Net Inc/Dec in cash equivalents 121 380 656 663

Closing Balance Cash and Cash Equivalents 994 1365 2021 2684

6Page

Ashok Leyland Ltd






ANALYST CERTIFICATION:

I, Praveen Motwani (MMS-Fin, BFM), research analyst , author and the name subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect my viewsabout the subject issuer(s) or securities. I also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & Conditions and other disclosures:

KRChoksey Shares and Securities Pvt. Ltd (hereinafter referred to as KRCSSPL) is a registered member of National Stock Exchange of India Limited and Bombay Stock Exchange Limited. KRCSSPL is aregistered Research Entity vides SEBI Registration No. INH000001295 under SEBI (Research Analyst) Regulations, 2014.

We submit that no material disciplinary action has been taken on KRCSSPL and its associates (Group Companies) by any Regulatory Authority impacting Equity Research Analysis activities.

KRCSSPL prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analyst covers.

The information and opinions in this report have been prepared by KRCSSPL and are subject to change without any notice. The report and information contained herein is strictly confidential andmeant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form,without prior written consent of KRCSSPL. While we would endeavor to update the information herein on a reasonable basis, KRCSSPL is not under any obligation to update the information. Also,there may be regulatory, compliance or other reasons that may prevent KRCSSPL from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily andsuch suspension is in compliance with applicable regulations and/or KRCSSPL policies, in circumstances where KRCSSPL might be acting in an advisory capacity to this company, or in certain othercircumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed.This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or otherfinancial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. KRCSSPL will not treat recipients as customers by virtue oftheir receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specificcircumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investmentobjectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independentlyevaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. KRCSSPL accepts no liabilitieswhatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk DisclosureDocument to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are notpredictions and may be subject to change without notice. Our employees in sales and marketing team, dealers and other professionals may provide oral or written market commentary or tradingstrategies that reflect opinions that are contrary to the opinions expressed herein, .In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may giverise to real or potential conflicts of interest.

Associates (Group Companies) of KRCSSPL might have received any commission/compensation from the companies mentioned in the report during the period preceding twelve months from the dateof this report for services in respect of brokerage services or specific transaction or for products and services other than brokerage services.

KRCSSPL or its Associates (Group Companies) have not managed or co-managed public offering of securities for the subject company in the past twelve months.

KRCSSPL encourages the practice of giving independent opinion in research report preparation by the analyst and thus strives to minimize the conflict in preparation of research report. KRCSSPL orits analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neitherKRCSSPL nor Research Analysts have any material conflict of interest at the time of publication of this report.

It is confirmed that, , Praveen Motwani (MMS-Fin, BFM), research analyst of this report have not received any compensation from the companies mentioned in the report in the preceding twelvemonths. Compensation of our Research Analysts is not based on any specific brokerage service transactions.

KRCSSPL or its associates (Group Companies) collectively or its research analyst do not hold any financial interest/beneficial ownership of more than 1% (at the end of the month immediatelypreceding the date of publication of the research report) in the company covered by Analyst, and has not been engaged in market making activity of the company covered by research analyst.

It is confirmed that, Praveen Motwani (MMS-Fin, BFM), research analyst do not serve as an officer, director or employee of the companies mentioned in the report.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other Jurisdiction, where suchdistribution, publication, availability or use would be contrary to law, regulation or which would subject KRCSSPL and affiliates to any registration or licensing requirement within such jurisdiction. Thesecurities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themof and to observe such restriction.

Please send your feedback to [email protected] us at www.krchoksey.com

KRChoksey Shares and Securities Pvt. LtdRegistered Office:

1102, Stock Exchange Tower, Dalal Street, Fort, Mumbai – 400 001.Phone: 91-22-6633 5000; Fax: 91-22-6633 8060.

Corporate Office: ABHISHEK, 5th Floor, Link Road, Andheri (W), Mumbai – 400 053.

Phone: 91-22-6696 5555; Fax: 91-22-6691 9576.

Rating Legend (Expected over a 12-month period)

Our Rating Upside

Buy More than 15%

Accumulate 5% – 15%

Hold 0 – 5%

Reduce -5% – 0

Sell Less than – 5%

mailto:[email protected]

http://www.krchoksey.com/

ashok leyland ltd - moneycontrol.comstatic-news.moneycontrol.com/.../06/ashok-leyland...ashok...

Documents