Ashok Leyland 4Q FY 2013

7/30/2019 Ashok Leyland 4Q FY 2013

1/13

Please refer to important disclosures at the end of this report 1

Quarterly highlights (Standalone)Y/E March (` cr) 4QFY13 4QFY12 % chg (yoy) 3QFY13 % chg (qoq)Net Sales 3,728 4,330 (13.9) 2,406 54.9EBITDA 198 470 (57.8) 103 91.8

EBITDA margin (%) 5.3 10.9 (554)bp 4.3 102bp

Adj. PAT 16 257 (93.9) (81) -Source: Company, Angel Research

Ashok Leyland (AL) reported extremely weak performance for 4QFY2013, broadlyin-line with our estimates, owing to sharp contraction in operating margins (downby 554bp yoy to 5.3%) on account of record discounts in the medium and heavycommercial vehicle (MHCV) segment, inferior product-mix and higher otherexpenditure. Additionally, higher interest cost due to higher working capitalrequirements also impacted the performance, leading to a modest adjustedbottom-line profit of `16cr. We broadly maintain our volume and revenueestimates for FY2014/15; however, we lower our EBITDA margin estimates by210bp/115bp for FY2014/15 to account for continued margin pressures due tohigher discounts and increasing share of Dost in the overall product-mix.Consequently, our earnings estimates are revised downwards by 48.1%/22.4%.While we believe that expected easing of interest rates in CY2013 will lead to revivalin industrial activity and thus the demand for MHCVs; increasing share of Dost inthe overall product-mix will restrict the expansion in operating margins. Werecommend an Accumulate rating on the stock.Poor 4QFY2013 results: For 4QFY2013, net sales posted a significant decline of13.9% yoy to `3,728cr; however, it was slightly ahead of our expectations of`3,520cr. The decline in the top-line was led by an 11.2% yoy drop in netaverage realization following record levels of discounting (average discounts at`130,000/vehicle vs. `110,000/vehicle in 3QFY2013) and adverse product-mix(higher proportion of Dost in the volume-mix at ~32% vs. ~14% in 4QFY2012).Total volumes too registered a decline of 2.9% yoy led by 23.3% yoy decline inMHCV volumes. The EBITDA margin registered a sharp contraction of 554bp yoyto 5.3% as against our estimates of 6.4%, due to raw-material cost pressures(hiked vendor compensation), increase in average discounts, higher marketingspends and a consultancy charge of `15cr. Consequently, adjusted net profitstood at `16cr for the quarter, which was in-line with our estimates.

Outlook and valuation: At `22, AL is trading at 10.7x FY2015E earnings. Werecommend an Accumulate rating on the stock with a target price of `25.

Key financials (Standalone)Y/E March (` cr) FY2012 FY2013E FY2014E FY2015ENet Sales 12,904 12,481 13,778 16,132% chg 15.5 (3.3) 10.4 17.1

Adjusted net Profit 564 144 249 549% chg (10.4) (74.4) 72.4 120.6

EBITDA (%) 9.7 7.0 7.5 8.6

EPS (`) 2.1 0.5 0.9 2.1P/E (x) 10.4 13.6 23.6 10.7

P/BV (x) 2.0 1.9 1.8 1.6

RoE (%) 13.8 3.3 5.5 11.7

RoCE (%) 12.9 6.3 7.3 10.6

EV/Sales (x) 0.5 0.5 0.5 0.4

EV/EBITDA (x) 5.3 8.0 6.8 4.9

Source: Company, Angel Research

ACCUMULATECMP `22

Target Price `25

Investment Period 12 Months

Stock Info

Sector

Market Cap (`cr)

Net Debt (`cr)

Beta

52 Week High / Low

Avg. Daily Volume

Face Value (`)

BSE Sensex

Nifty

Reuters Code

Bloomberg Code

Shareholding Pattern (%)

Promoters 38.6

MF / Banks / Indian Fls 19.4

FII / NRIs / OCBs 31.4Indian Public / Others 10.6

Abs. (%) 3m 1yr 3yr

Sensex 0.4 20.9 14.0

Ashok Leyland (4.3) (17.5) (35.2)

AL@IN

Automobile

1.0

19,692

5,980

ASOK.BO

5,880

0.9

29/20

945,163

3,491

Yaresh Kothari022-3935 7800 Ext: 6844

[email protected]

Ashok LeylandPerformance Highlights

4QFY2013 Result Update | Automobile

May 13, 2013


2/13

Ashok Leyland | 4QFY2013 Result Update

May 13, 2013 2

Exhibit 1:Quarterly financial performance (Standalone)Y/E March (` cr) 4QFY13 4QFY12 % chg (yoy) 3QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Net Sales 3,728 4,330 (13.9) 2,406 54.9 12,481 12,904 (3.3)Consumption of RM 2,378 3,026 (21.4) 1,402 69.6 7,811 8,954 (12.8)

(% of sales) 63.8 69.9 58.2 62.6 69.4

Staff costs 282 247 14.3 262 7.8 1,076 1,020 5.4

(% of sales) 7.6 5.7 10.9 8.6 7.9

Purchase of traded goods 447 183 143.9 309 44.7 1,312 507 158.5

(% of sales) 12.0 4.2 12.8 10.5 3.9

Other expenses 423 404 4.9 331 28.1 1,406 1,166 20.6

(% of sales) 11.4 9.3 13.7 11.3 9.0

Total Expenditure 3,530 3,860 (8.5) 2,303 53.3 11,605 11,648 (0.4)Operating Profit 198 470 (57.8) 103 91.8 876 1,256 (30.2)OPM (%) 5.3 10.9 4.3 7.0 9.7

Interest 83 72 14.3 107 (22.7) 377 255 47.7

Depreciation 100 96 4.6 93 7.4 381 353 7.9Other income 12 11 6.0 14 (18.2) 62 40 54.5

PBT (excl. Extr. Items) 27 313 (91.4) (83) (132.7) 181 688 (73.7)Extr. income/(expense) (134) (2) - (155) - (290) (2) -

PBT (incl. Extr. Items) 161 314 (48.7) 72 122.8 471 690 (31.8)(% of sales) 4.3 7.3 3.0 3.8 5.3

Provision for taxation 11 56 (79.6) (2) (773.4) 37 124 (70.2)

(% of PBT) 7.1 17.7 (2.3) 7.9 18.0

Reported PAT 150 259 (42.0) 74 102.4 434 566 (23.4)Adj PAT 16 257 (93.9) (81) - 144 564 (74.5)

Adj. PATM 4.0 6.0 3.1 3.5 4.4

Equity capital (cr) 266 266 266 266 266

Reported EPS (`) 0.1 1.0 (93.9) (0.3) (119.3) 0.5 2.1 (74.5)Source: Company, Angel Research

Exhibit 2:4QFY2013 Actual vs Angel estimatesY/E March (` cr) Actual Estimates Variation (%)Net Sales 3,728 3,520 5.9EBITDA 198 227 (12.5)

EBITDA margin (%) 5.3 6.4 (112)bp

Adj. PAT 16 16 (3.3)Source: Company, Angel Research

Exhibit 3:Quarterly volume performance(units) 4QFY13 4QFY12 % chg (yoy) 3QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)MHCV passenger 6,909 8,764 (21.2) 4,639 48.9 23,500 25,936 (9.4)

MHCV goods 16,646 21,715 (23.3) 9,937 67.5 55,503 67,425 (17.7)

LCV (ex. Dost) 48 297 (83.8) 105 (54.3) 785 1,172 (33.0)

Total volume (ex. Dost) 23,603 30,776 (23.3) 14,681 60.8 79,788 94,533 (15.6)Dost 11,024 4,893 125.3 7,980 38.1 34,918 7,593 359.9

Total volume (incl. Dost) 34,627 35,669 (2.9) 22,661 52.8 114,706 102,126 12.3Exports (inc. above ) 2,211 4,106 (46.2) 1,702 29.9 8,999 12,954 (30.5)



3/13


May 13, 2013 3

Top-line growth surprises positively: For 4QFY2013, net sales posted a significantdecline of 13.9% yoy to `3,728cr; however, it was slightly ahead of our

expectations of `3,520cr. The decline in the top-line was driven by an 11.2% yoy

drop in net average realization following higher levels of discounts (averagediscounts at `130,000/vehicle vs. `110,000/vehicle in 3QFY2013) and adverse

product-mix (higher proportion of Dost in the volume-mix at ~32% vs. ~14% in

4QFY2012). Total volumes too registered a decline of 2.9% yoy led by 23.3% yoy

decline in MHCV volumes. However, Dost sales witnessed a substantial increase of

125.3% yoy (on a low base) and 38.1% qoq during the quarter.

Exhibit 4:Volumes down on decline in MHCV sales


Exhibit 5:Net average realization down 11.2% yoy


Exhibit 6:Net sales down 13.9% yoy


Exhibit 7:Domestic market share trend

Source: Company, SIAM, Angel Research

EBITDA margin pressures continue: On the operating front, EBITDA marginregistered a sharp contraction of 554bp yoy to 5.3% as against our estimates of

6.4%, due to raw-material cost pressures, increase in average discounts, higher

marketing spends and a consultancy charge of `15cr. Led by an increase in the

vendor compensation which had an impact of `23cr and adverse product-mix and

higher discounts, raw-material cost as a percentage of sales increased 170bp yoy

(470bp qoq) to 75.8%. The employee expenditure as a percentage of sales rose

190bp yoy largely due to the payout of incentives (`30cr) to the marketing team.

The other expenditure continued to remain at elevated levels led by a consultancy

charge of `15cr, higher marketing and annual maintenance costs and also on

account of higher power costs (due to frequent power cuts in Tamil Nadu).

29,6

80

19,2

77

23,6

59

23,2

15

35,6

88

27,5

78

29,8

40

22,6

61

34,6

27

15.0

(9.9)

(3.8)

25.9

20.2

43.1

26.1

(2.4) (3.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0

40.0

50.0

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(units) Total volumes yoy chg (%)

1,2

96,6

46

1,3

03,4

68

1,3

16,5

45

1,2

50,6

84

1,2

13,1

61

1,0

90,4

88

1,1

04,5

73

1,0

61,8

99

1,0

76,7

50

13.9

18.8 19.3

3.5(6.4)

(16.3)(16.1)

(15.1)

(11.2)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(`) Net average realisation yoy chg (%)

3,8

48

2,5

13

3,1

15

2,9

03

4,3

30

3,0

07

3,2

96

2,4

06

3,7

28

30.9

7.0

14.8

30.4

12.5

19.7

5.8

(17.1)(13.9)

(30.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0

40.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(`cr) Net sales yoy chg (%)

45.1

39.7 39.643.8 42.9

39.135.2

43.3 43.4

24.6

19.221.1

17.7

22.3 22.7 23.5

19.0

27.8

27.2

22.2 23.7 21.0

25.5 26.0 25.422.6

30.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%) MHCV passenger MHCV goods Total MHCV


4/13


May 13, 2013 4

On a sequential basis, EBITDA margins improved 102bp driven by 52.8% and

1.4% growth in volumes and net average realization respectively.

Exhibit 8: EBITDA margin pressure continues


Exhibit 9:Adjusted bottom-line profit of`16cr


Adjusted bottom-line profit at `16cr: Led by disappointing operating performanceand higher interest cost (up 14.3% yoy) due to increasing working capital

requirements, adjusted net profit stood at `16cr. However, the companys reported

net profit stood at `150cr due to an exceptional gain of `134cr (on account of

profit on sale of non-current investments).

13.29.7 10.6 7.2

10.9 8.0 10.14.3 5.3

72.8 72.9 74.7 75.3 74.1 74.4 74.5 71.175.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%) EBITDA margin Raw material cost/sales

298

86

154

67

257

67

143

(81)

16

7.7

3.4

4.9

2.3

5.9

2.2

4.3

(3.4)

0.4

(4.0)

(2.0)

0.0

2.0

4.0

6.0

8.0

10.0

(150)

(100)

(50)

0

50

100

150

200

250

300

350

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

(%)(`cr) Net profit Net profit margin


5/13


May 13, 2013 5

Conference call Key highlights

According to the Management, the growth in the MHCV industry is expected toremain subdued in 1HFY2014. However, with the expected recovery in the

domestic economy, the management expects volumes to rebound in

2HFY2014. The MHCV industry is expected to grow in mid single digits in

FY2014.

For FY2014, the company is targeting sales of around 75,000 units in thedomestic MHCV segment and sales of 10,000 units in the exports market. The

company expects to clock sales of around 50,000 units of Dost. The company

is planning to launch a CNG variant of Dost and a passenger variant LCV.

AL has gained ~300bp market share in the MHCV segment in FY2013, withthe majority of the gains coming from the Intermediate Commercial Vehicle

(ICV) segment. The company has gained market share in North, East andCentral regions of the country, while largely maintaining its share in South.

According to the Management, the breakeven levels for Dost are in the rangeof 50,000-55,000 units. The combined installed capacity (at AL and Nissan

facilities) for Dost currently stands at 110,000 units (55,000 units each). The

proportion of Dost sales outside Tamil Nadu have increased to about 30%

from 28% earlier. As a part of the agreement with Nissan, for all Dost vehicles

sold in Tamil Nadu, AL only books the distribution margin in the revenues. For

Dost sales outside Tamil Nadu, the vehicle is purchased from the JV and sold

by the company.

The company took a price increase of `18,000/vehicle in April 2013 inaddition to a ~3% price increase taken in 2HFY2013.

The company would focus on reducing its debt levels in FY2014. The longterm and working capital debt stood at `3,500cr and `800cr respectively as of

March 2013. The company plans to divest some investments in the coming

quarters to reduce its FY2014 debt levels.

Spare parts revenue during 4QFY2013 and FY2013 stood at ~`300cr and~`1,000cr respectively. For 4QFY2013, engine volumes stood at 7,290 units

(~22,000 units in FY2013) and engine revenues came in at `170cr.

The production at the Pantnagar plant stood at ~30,000 units in FY2013. ForFY2014, the company is targeting a production of ~40,000 units from the

Pantnagar facility. The income tax benefit at the Pantnagar plant will expire in

FY2015 and thereafter the company will get 30% tax benefit; however excise

benefits expire by 2020. Post the recent excise duty hike and increase in

localization at the plant, benefits have increased to `60,000/vehicle, up from

`45,000/vehicle.

The company incurred a capex of `730cr in FY2013. For FY2014, AL hasguided for a capex of `250cr.

The company would be merging Ashley Investments and Ashley Holdings withitself by end of 1HFY2014.


6/13


May 13, 2013 6

Investment arguments

Volume growth to benefit from easing of interest rates and recently launchedDost: MHCV demand has witnessed a substantial slowdown in recent timesdue to high interest rates and slowdown in industrial activity; however, we

believe MHCV demand is near its trough. With reversal in interest rates in

CY2013, we expect a pick-up in industrial activity, leading to a rebound in

MHCV sales in FY2014. As a result, we expect ALs MHCV volumes to register

~6% yoy growth in FY2014 (after posting a decline of ~16% in FY2013).

Further, the recently introduced LCV - Dost [through JV with Nissan]) has been

received well by the markets and AL expects to ramp-up its production going

ahead. We expect the company to clock sales of 45,000 units in FY2014.

EBITDA margin to improve gradually over the next two years: Whileraw-material prices have stabilized and AL expects to benefit from the higher

production from the Pantnagar facility (total profitability estimated to be higher

due to cost savings of ~`60,000/vehicle); the companys product-mix has

changed due to increasing proportion of the lower margin LCV - Dost

(contribution to total volumes to increase from ~7% in FY2012 to ~30% in

FY2013). AL has indicated that it earns marketing/distribution fees of

`15,000-`18,000/vehicle on Dost sales and has also guided that the margins

should be structurally lower by ~200bp due to Dost sales. While the EBITDA

margins have declined by 270bp in FY2013 led by higher share of Dost and

higher levels of discounting; we expect the margins to improve ~50bp in

FY2014 to 7.5% (as guided by the Management) primarily on account of

revival in MHCV sales leading to operating leverage benefits, price hikes of~5% since 1HFY2013 and lower levels of discounts.

Outlook and valuation

We broadly maintain our volume and revenue estimates for FY2014/15; however,

we lower our EBITDA margin estimates by 210bp/115bp for FY2014/15 to

account for continued margin pressures due to higher discounts and increasing

share of Dost in the overall product-mix. Consequently, our earnings estimates are

revised downwards by 48.1%/22.4%.

Exhibit 10:Change in estimatesY/E March Earlier Estimates Revised Estimates % chg

FY2014E FY2015E FY2014E FY2015E FY2014E FY2015ENet Sales (` cr) 13,833 16,192 13,778 16,132 (0.4) (0.4)OPM (%) 9.6 9.7 7.5 8.6 (210)bp (115)bp

EPS (`) 1.8 2.7 0.9 2.1 (48.1) (22.4)Source: Company, Angel Research

While we believe that the expected easing of interest rates in CY2013 will lead to

revival in industrial activity and thus the demand for MHCVs; increasing share of

Dost in the overall product-mix will restrict the expansion in operating margins.

According to the Management operating margins are expected to be around 7.5%(9.5% excluding the impact of Dost) in FY2014. At `22, AL is trading at 10.7x

FY2015E earnings. We recommend an Accumulate rating on the stock with atarget price of `25.


7/13


May 13, 2013 7

Exhibit 11:Key assumptions(units) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EMHCV passenger 18,481 25,226 25,845 23,500 24,675 27,143

MHCV goods 44,345 68,007 67,408 55,503 58,833 65,893LCV (ex. Dost) 1,100 873 1,172 785 785 785

Dost - - 7,593 34,918 45,000 55,000

Total volume (units) 63,926 94,106 102,018 114,706 129,293 148,821% yoy chg 17.4 47.2 8.4 12.4 12.7 15.1Domestic 57,947 83,800 89,109 105,707 119,293 137,621

Exports 5,979 10,306 12,909 8,999 10,000 11,200


Exhibit 12:Angel vs consensus forecastAngel estimates Consensus Variation (%)FY2014E FY2015E FY2014E FY2015E FY2014E FY2015E

Total op. income (` cr) 13,778 16,132 14,249 16,519 (3.3) (2.3)EPS (`) 0.9 2.1 1.4 2.4 (30.8) (12.3)

Source: Bloomberg, Angel Research

Exhibit 13:One-year forward P/E band


Exhibit 14:One-year forward P/E chart


Exhibit 15:One-year forward EV/EBITDA band


Exhibit 16:One-year forward EV/EBITDA chart


0

5

10

15

20

25

30

35

40

45

Apr-03

Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

May-1

1

May-1

2

May-1

3

(`) CMP (`) 6.0 9.0 12.0 15.0

0

10

20

30

40

50

60

70

80

90

Aug-0

5

Mar-06

Nov-0

6

Jul-07

Mar-08

Oct-08

Jun-0

9

Feb-1

0

Oct-10

May-1

1

Jan-1

2

Sep-1

2

May-1

3

(x) One-yr forward P /E Five-yr average P/E

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Apr-03

Feb-0

4

Dec-0

4

Oct-05

Aug-0

6

Jun-0

7

Apr-08

Feb-0

9

Dec-0

9

Oct-10

Aug-1

1

Jun-1

2

May-1

3

(`cr) EV (` cr) 2.0 4.0 6.0 8.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Aug-0

5

Mar-06

Nov-0

6

Jul-07

Mar-08

Oct-08

Jun-0

9

Feb-1

0

Oct-10

M

ay-1

1

Jan-1

2

Sep-1

2

M

ay-1

3

(x) One-yr forward EV/EBITDA Five-yr average EV/EBITDA


8/13


May 13, 2013 8

Exhibit 17:Automobile - Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%)

P/E (x) EV/EBITDA (x) RoE (%) FY13-15E EPSFY14E FY15E FY14E FY15E FY14E FY15E CAGR (%)

Ashok Leyland Accumulate 22 25 11.9 23.6 10.7 6.8 4.9 5.5 11.7 95.0Bajaj Auto Accumulate 1,818 2,014 10.8 15.4 13.5 10.3 8.6 40.2 36.6 13.8

Hero MotoCorp Accumulate 1,682 1,819 8.2 15.3 12.0 7.9 7.1 39.8 40.7 14.9

Maruti Suzuki Accumulate 1,704 1,847 8.4 15.8 13.8 7.9 6.8 16.2 16.0 24.7

Mahindra &Mahindra

Accumulate 957 1,006 5.2 16.1 14.0 8.9 7.3 22.3 21.6 11.5

Tata Motors Accumulate 298 324 8.7 9.1 7.5 4.2 3.5 23.4 23.3 17.6

TVS Motor Neutral 39 - - 7.9 6.8 2.9 2.2 18.1 18.5 15.3


Company backgroundAshok Leyland (AL) is the country's second largest CV manufacturer. The company

has a strong presence in the MHCV segment, with a domestic market share of

~26% as of FY2012. AL enjoys a dominant position in southern India, with a

~48% market share, and is currently focusing on expanding its presence in

northern India by increasing its touch points in the region. The company, through

its JV with Nissan Motor and John Deere, intends to expand its product portfolio

and has recently launched Dost to tap the growing LCV demand and a backhoeloader(used in the construction equipment segment).


9/13


May 13, 2013 9

Profit and loss statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ETotal operating income 7,245 11,177 12,904 12,481 13,778 16,132% chg 21.1 54.3 15.5 (3.3) 10.4 17.1Total expenditure 6,485 9,963 11,648 11,605 12,739 14,746Net raw material costs 5,212 8,175 9,462 9,123 9,989 11,615

Other mfg costs 135 235 275 300 338 331

Employee expenses 667 975 1,020 1,076 1,171 1,371

Other 471 579 891 1,106 1,241 1,429

EBITDA 760 1,214 1,256 877 1,039 1,386% chg 66.6 59.8 3.5 (30.2) 18.5 33.4

(% of total op. income) 10.5 10.9 9.7 7.0 7.5 8.6

Depreciation & amortization 204 267 353 381 393 408

EBIT 555 946 903 496 646 977% chg 100.1 70.4 (4.5) (45.1) 30.3 51.3


Interest and other charges 102 189 255 377 412 387

Other income 91 44 40 62 70 78

(% of PBT) 18.1 5.6 5.8 13.2 23.0 11.7

Recurring PBT 545 802 688 181 303 669% chg 161.3 47.2 (14.1) (73.7) 67.3 120.6

Extraordinary income/(exp.) 40 1 (2) (290) - -

PBT 505 800 690 471 303 669Tax 121 171 124 37 55 120

(% of PBT) 24.0 21.3 18.0 7.9 18.0 18.0

PAT (reported) 424 631 566 434 249 549ADJ. PAT 384 630 564 144 249 549% chg 114.6 64.2 (10.4) (74.4) 72.4 120.6


Basic EPS (`) 1.6 2.4 2.1 1.6 0.9 2.1Adj. EPS (`) 1.4 2.4 2.1 0.5 0.9 2.1% chg 114.6 64.2 (10.4) (74.4) 72.4 120.6


10/13


May 13, 2013 10

Balance sheet statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ESOURCES OF FUNDSEquity share capital 133 133 266 266 266 266Reserves & surplus 3,536 3,830 3,942 4,190 4,254 4,617

Shareholders Funds 3,669 3,963 4,208 4,456 4,520 4,883Total loans 2,280 2,348 2,395 3,505 4,005 3,755

Deferred tax liability 385 444 490 527 527 527

Other long term liabilities - - 4 2 2 2

Long term provisions - 78 77 79 79 79

Total Liabilities 6,334 6,833 7,174 8,569 9,132 9,245APPLICATION OF FUNDSGross block 6,019 6,692 7,256 8,126 8,360 8,687

Less: Acc. depreciation 1,769 2,058 2,343 2,724 3,117 3,525

Net Block 4,250 4,634 4,914 5,402 5,243 5,162Capital work-in-progress 561 358 548 569 585 608

Goodwill - - - - - -

Investments 326 1,230 1,534 2,338 2,740 2,774Long term loans and advances 385 608 480 480 480

Other noncurrent assets 3 7 12 12 12

Current assets 4,152 3,984 4,304 4,298 4,908 5,777Cash 519 180 33 14 47 35

Loans & advances 973 431 810 967 1,061 1,242

Other 2,660 3,373 3,461 3,317 3,799 4,500

Current liabilities 2,961 3,760 4,742 4,529 4,835 5,568

Net current assets 1,191 224 (438) (231) 73 209Misc. exp. not written off 5 - - - - -

Total Assets 6,334 6,833 7,174 8,569 9,132 9,245


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Cash flow statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EProfit before tax 545 802 688 471 303 669

Depreciation 204 267 353 381 393 408Change in working capital 264 628 518 (225) (270) (149)

Others 289 (891) (275) 161 - -

Other income (91) (44) (40) (62) (70) (78)

Direct taxes paid (121) (171) (124) (37) (55) (120)

Cash Flow from Operations 1,090 591 1,120 688 301 729(Inc.)/Dec. in fixed assets (643) (470) (755) (890) (250) (350)

(Inc.)/Dec. in investments (63) (904) (304) (803) (402) (34)

Other income 91 44 40 62 70 78

Cash Flow from Investing (614) (1,329) (1,019) (1,631) (582) (306)Issue of equity - - - - - -

Inc./(Dec.) in loans 322 68 47 1,110 500 (250)

Dividend paid (Incl. Tax) 156 233 309 186 186 186

Others (523) 97 (604) - - -

Cash Flow from Financing (45) 398 (248) 924 314 (436)Inc./(Dec.) in cash 430 (340) (147) (19) 34 (13)

Opening Cash balances 88 519 180 33 14 47Closing Cash balances 519 180 33 14 47 35


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Key ratios

Y/E March FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EValuation Ratio (x)P/E (on FDEPS) 15.3 9.3 10.4 13.6 23.6 10.7P/CEPS 10.0 6.6 6.4 7.2 9.2 6.1

P/BV 2.5 2.2 2.0 1.9 1.8 1.6

Dividend yield (%) 3.4 4.5 4.5 2.7 2.7 2.7

EV/Sales 0.9 0.6 0.5 0.5 0.5 0.4

EV/EBITDA 9.6 5.6 5.3 8.0 6.8 4.9

EV / Total Assets 1.2 1.0 0.9 0.8 0.8 0.7

Per Share Data (`)EPS (Basic) 1.4 2.4 2.1 1.6 0.9 2.1

EPS (fully diluted) 1.4 2.4 2.1 1.6 0.9 2.1

Cash EPS 2.2 3.4 3.5 3.1 2.4 3.6

DPS 0.8 1.0 1.0 0.6 0.6 0.6

Book Value 8.8 10.0 10.9 11.8 12.1 13.4

Dupont AnalysisEBIT margin 7.7 8.5 7.0 4.0 4.7 6.1

Tax retention ratio 0.8 0.8 0.8 0.9 0.8 0.8

Asset turnover (x) 1.7 2.3 2.3 1.9 1.8 2.1

ROIC (Post-tax) 9.7 15.2 13.3 7.0 7.1 10.2

Cost of Debt (Post Tax) 3.7 6.4 8.8 11.8 9.0 8.2

Leverage (x) 0.4 0.3 0.2 0.2 0.3 0.2

Operating ROE 12.2 17.9 14.2 5.9 6.5 10.7

Returns (%)ROCE (Pre-tax) 9.2 14.4 12.9 6.3 7.3 10.6

Angel ROIC (Pre-tax) 12.4 17.7 15.5 6.8 8.3 12.4

ROE 10.7 16.5 13.8 3.3 5.5 11.7

Turnover ratios (x)Asset Turnover (Gross Block) 1.3 1.8 1.9 1.6 1.7 1.9

Inventory / Sales (days) 75 63 63 60 62 63

Receivables (days) 50 36 34 39 38 38

Payables (days) 112 97 108 123 123 122

WC cycle (ex-cash) (days) 41 12 (6) (10) (3) 2

Solvency ratios (x)Net debt to equity 0.4 0.2 0.2 0.3 0.3 0.2

Net debt to EBITDA 1.9 0.8 0.7 1.3 1.2 0.7

Interest Coverage (EBIT / Int.) 5.5 5.0 3.5 1.3 1.6 2.5


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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement Ashok Leyland

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

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Documents

Ashok Leyland 4Q FY 2013