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Please refer to important disclosures at the end of this report 1
Quarterly highlights (Standalone) Y/E March (` cr) 3QFY13 3QFY12 % chg (yoy) 2QFY13 % chg (qoq)
Net Sales 2,381 2,903 (18.0) 3,296 (27.8)
EBITDA 102 210 (51.4) 334 (69.4)
EBITDA margin (%) 4.3 7.2 (295)bp 10.1 (584)bp
Adj. PAT (82) 67 - 143 -
Source: Company, Angel Research
Ashok Leyland (AL) reported disappointing results for 3QFY2013 as operating margins collapsed to 4.3%, down 295bp yoy and 584bp qoq, owing to higher discounts in the medium and heavy commercial vehicle (MHCV) segment, adverse product-mix (higher share of Dost) and lower utilization levels. Further, higher interest cost due to increasing working capital requirements also impacted the performance, leading to a bottom-line (adjusted basis) loss of `82cr. We lower our volume estimates to account for the continued weakness in the MHCV segment. We also lower our EBITDA margin estimates to factor in weak 3QFY2013 performance and higher levels of discounting in the industry. Additionally, we raise our estimates for interest outgo due to the increasing working capital requirements. Nevertheless, we believe that expected easing of interest rates in CY2013 will lead to revival in industrial activity and thus the demand for MHCVs. We therefore recommend an Accumulate rating on the stock.
Dismal 3QFY2013 results: AL posted a significant decline of 18% yoy (27.8% qoq) in its net sales to `2,381cr as against our estimates of `2,498cr. The disappointing performance was largely due to 29.5% yoy (30.7% qoq) decline in total volumes ex. Dost and 16% yoy (4.9% qoq) decline in net average realization owing to higher level of discounts and adverse product-mix. However, total volumes (including Dost), declined by only 2.8% yoy (24.1% qoq). At the operating level, AL witnessed a substantial contraction in margins to 4.3% (down 295bp yoy) as against our estimates of 8.3%. This can be attributed to 340bp (370bp qoq) and 160bp yoy (300bp qoq) increase in other expenditure and staff cost as a percentage of sales respectively. As a result, the adjusted net profit posted a loss of `82cr for the quarter.
Outlook and valuation: While the near term outlook for the MHCV industry remains challenging due to slowdown in overall industrial activity; we expect volumes to recover in FY2014E led by likely easing of interest rates in CY2013. At `25, AL is trading at 11.2x its FY2014E earnings. We recommend an Accumulate rating on the stock with a target price of `28.
Key financials (Standalone) Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E
Net Sales 11,177 12,842 12,910 14,836
% chg 54.3 14.9 0.5 14.9
Net Profit 630 561 394 592
% chg 64.2 (11.0) (29.7) 50.2
EBITDA (%) 10.9 9.8 8.8 9.6
EPS (`) 2.4 2.1 1.5 2.2
P/E (x) 10.6 11.9 16.9 11.2
P/BV (x) 2.5 2.3 2.2 2.0
RoE (%) 16.5 13.7 9.3 13.3
RoCE (%) 14.4 12.9 10.3 12.7
EV/Sales (x) 0.6 0.5 0.5 0.5
EV/EBITDA (x) 6.3 6.0 6.7 5.5 Source: Company, Angel Research
ACCUMULATE CMP `25 Target Price `28
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 19.7
FII / NRIs / OCBs 31.4
Indian Public / Others 10.3
Abs. (%) 3m 1yr 3yr
Sensex 7.2 17.7 19.8
Ashok Leyland 7.5 (8.8) (3.2)
AL@IN
Automobile
1.0
20,104
6,075
ASOK.BO
6,652
1.1
33/20
971,753
3,494
Yaresh Kothari 022-3935 7800 Ext: 6844
yareshb.kothari@angelbroking.com
Ashok Leyland Performance Highlights
3QFY2013 Result Update | Automobile
January 25, 2013
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
2
Exhibit 1: Quarterly financial performance (Standalone) Y/E March (` cr) 3QFY13 3QFY12 % chg (yoy) 2QFY13 % chg (qoq) 9MFY13 9MFY12 % chg (yoy)
Net Sales 2,381 2,903 (18.0) 3,296 (27.8) 8,684 8,531 1.8
Consumption of RM 1,402 1,992 (29.6) 2,097 (33.1) 5,434 5,929 (8.3)
(% of sales) 58.9 68.6 63.6 62.6 69.5 Staff costs 262 272 (3.9) 264 (0.8) 793 774 2.6
(% of sales) 11.0 9.4 8.0 9.1 9.1 Purchase of traded goods 309 156 97.4 303 2.1 865 324 166.8
(% of sales) 13.0 5.4 9.2 10.0 3.8 Other expenses 306 272 12.4 299 2.4 915 719 27.3
(% of sales) 12.8 9.4 9.1 10.5 8.4 Total Expenditure 2,278 2,693 (15.4) 2,962 (23.1) 8,007 7,745 3.4
Operating Profit 102 210 (51.4) 334 (69.4) 677 786 (13.9)
OPM (%) 4.3 7.2 10.1 7.8 9.2 Interest 107 60 77.5 104 3.3 294 183 60.9
Depreciation 93 87 7.5 98 (5.4) 281 257 9.2
Other income 14 9 64.5 24 (40.9) 51 29 72.4
PBT (excl. Extr. Items) (84) 72 (216.5) 156 (153.8) 153 376 (59.2)
Extr. income/(expense) (156) - - - - (156) - -
PBT (incl. Extr. Items) 72 72 0.7 156 (53.5) 309 376 (17.6)
(% of sales) 3.0 2.5 4.7 3.6 4.4 Provision for taxation (2) 5 (133.4) 13 (112.7) 26 68 (62.5)
(% of PBT) (2.3) 7.0 8.5 8.3 18.2 Reported PAT 74 67 10.8 143 (48.0) 284 307 (7.7)
Adj PAT (82) 67 (222.7) 143 (157.6) 127 307 (58.5)
Adj. PATM 3.1 2.3 4.3 3.3 3.6 Equity capital (cr) 266 266 266 266 266 Reported EPS (`) 0.3 0.3 10.8 0.5 (48.0) 1.1 1.2 (7.7)
Source: Company, Angel Research
Exhibit 2: 3QFY2013 – Actual vs Angel estimates Y/E March (` cr) Actual Estimates Variation (%)
Net Sales 2,381 2,498 (4.7)
EBITDA 102 208 (50.9)
EBITDA margin (%) 4.3 8.3 (404)bp
Adj. PAT (82) 67 -
Source: Company, Angel Research
Exhibit 3: Quarterly volume performance (units) 3QFY13 3QFY12 % chg (yoy) 2QFY13 % chg (qoq) 9MFY13 9MFY12 % chg (yoy)
MHCV passenger 4,639 5,721 (18.9) 5,348 (13.3) 16,591 17,172 (3.4)
MHCV goods 9,937 14,697 (32.4) 15,625 (36.4) 38,857 45,710 (15.0)
LCV (ex. Dost) 105 403 (73.9) 201 (47.8) 737 875 (15.8)
Total volume (ex. Dost) 14,681 20,821 (29.5) 21,174 (30.7) 56,185 63,757 (11.9)
Dost 7,980 2,490 220.5 8,666 (7.9) 23,984 2,700 788.3
Total volume (incl. Dost) 22,661 23,311 (2.8) 29,840 (24.1) 80,169 66,457 20.6
Exports (inc. above ) 1,702 3,079 (44.7) 2,083 (18.3) 6,788 8,848 (23.3)
Source: Company, Angel Research
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
3
Lower-than-expected growth in top-line: For 3QFY2013, net sales posted a significant decline of 18% yoy (27.8% qoq) to `2,381cr as against our estimates of `2,498cr. The disappointing performance was largely due to 29.5% yoy (30.7% qoq) decline in total volumes (ex. Dost) and 16% yoy (4.9% qoq) decline in net average realization. However, total volumes including Dost, declined by only 2.8% yoy (24.1% qoq) as Dost volumes surged significantly on a low base of last year. The net average realization fell sharply largely on account of higher contribution from the lower priced Dost vehicle and also due to higher discounts in the MHCV segment (higher by `15,000/vehicle to `115,000). Further, withdrawal of duty drawback rates on exports to 2% from 5.5% earlier also impacted the net average realization.
Exhibit 4: Volumes down on decline in MHCV sales
Source: Company, Angel Research
Exhibit 5: Net average realization down 16% yoy
Source: Company, Angel Research
Exhibit 6: Net sales down 18% yoy
Source: Company, Angel Research
Exhibit 7: Domestic market share trend
Source: Company, SIAM, Angel Research
EBITDA margin shrinks to 4.3%: On the operating front, EBITDA margin collapsed 584bp qoq (295bp yoy) to 4.3%, significantly lower than our estimates of 8.3%. This was primarily on account of higher discounts in the MHCV segment, inferior product-mix (share of Dost increased to 35.2% in 3QFY2013 vs 29% in 2QFY2013) and lower utilization levels (due to lower volumes). As a result, other expenditure and staff cost as a percentage of sales surged 340bp (370bp qoq) and 160bp yoy (300bp qoq) respectively during the quarter. The other expenditure was higher on account of higher power costs (due to frequent power cuts in Tamil Nadu), consultancy expenditure, and maintenance and warranty expenses.
18,437
29,680
19,277
23,659 23,215
35,688
27,578 29,840
22,661
14.3 15.0
(9.9)(3.8)
25.9 20.2
43.1
26.1
(2.4)
(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
3QFY
11
4QFY
11
1QFY
12
2QFY
12
3QFY
12
4QFY
12
1QFY
13
2QFY
13
3QFY
13
(%)(units) Total volumes yoy chg (%)
7.2
13.9
18.8 19.3
3.5
(6.8)
(16.3)
(16.1) (16.0)
(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
3QFY
11
4QFY
11
1QFY
12
2QFY
12
3QFY
12
4QFY
12
1QFY
13
2QFY
13
3QFY
13
(%)(`) Net average realisation yoy chg (%)
2,227
3,848
2,513
3,115 2,903
4,311
3,007 3,296
2,381
22.5
30.9 7.0
14.8
30.4
12.0
19.7
5.8
(18.0)
(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
3QFY
11
4QFY
11
1QFY
12
2QFY
12
3QFY
12
4QFY
12
1QFY
13
2QFY
13
3QFY
13
(%)(`cr) Net sales yoy chg (%)
48.945.1
39.7 39.643.8 43.5
39.135.2
43.3
15.6
24.619.2 21.1
17.722.3 22.7 23.5
19.0
20.4
27.222.2 23.7
21.025.5 26.0 25.4
22.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
3QFY
11
4QFY
11
1QFY
12
2QFY
12
3QFY
12
4QFY
12
1QFY
13
2QFY
13
3QFY
13
(%) MHCV passenger MHCV goods Total MHCV
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
4
Exhibit 8: EBITDA margin shrinks to 4.3%
Source: Company, Angel Research
Exhibit 9: Adjusted bottom-line loss of `82cr
Source: Company, Angel Research
Adjusted bottom-line loss of `82cr: Led by disappointing operating performance and higher interest cost (up 77.5% yoy) due to increasing working capital requirements, AL reported a PBT loss of `84cr. However, on the net profit front, the company reported a `74cr profit led by an exceptional gain of `156cr (due to profit on sale of non-current investments). Nevertheless, adjusted for the exceptional gain, AL reported a net loss of `82cr as against `67cr profit in 3QFY2012 (`143cr in 2QFY2013).
7.5 13.2 9.7 10.6 7.2
10.9 8.0 10.1 4.3
73.2 72.8 72.9 74.7 75.3 75.8 74.4 74.5 73.7
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
3QFY
11
4QFY
11
1QFY
12
2QFY
12
3QFY
12
4QFY
12
1QFY
13
2QFY
13
3QFY
13
(%) EBITDA margin Raw material cost/sales
43 298 86 154 67 257 67 143
(82)
1.9
7.7
3.4 4.9
2.3
6.0
2.2
4.3
(3.4)(6.0)
(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
3QFY
11
4QFY
11
1QFY
12
2QFY
12
3QFY
12
4QFY
12
1QFY
13
2QFY
13
3QFY
13
(%)(` cr) Net profit Net profit margin
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
5
Conference call – Key highlights
The management expects the MHCV industry to post a decline in FY2013; however it is hopeful of slightly better performance in 4QFY2013 as against 3QFY2013. The company expects to post 24,000-25,000 units of MHCV sales in 4QFY2013. The company sees Dost sales of ~36,000 units in FY2013.
While the MHCV industry sales have declined by ~20% in 9MFY2013, AL’s sales are down by ~12%. The company is targeting a market share of ~26% for FY2013 (YTD market share of ~25%). Going ahead, the Management expects that the company should grow at a rate of 10% in the MHCV segment and is targeting market share gains of ~100bp.
The management has indicated that Dost sales in December 2012 were impacted to the tune of 800-900 units due to the year-end phenomenon. The company expects a monthly run rate of 3,500 units of Dost in 4QFY2013. According to the Management, the breakeven levels for Dost are in the range of 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). AL sold ~5,800 units of Dost units outside Tamil Nadu and ~2,200 units in Tamil Nadu in 3QFY2013.
The contribution of southern India in overall CV industry was ~26% in 3QFY2013.
The debt levels of the company have increased as compared to March 2012. While long term debt stood at `3,500cr, working capital debt stood at `1,500cr as of December 2012. The company plans to divest some investments in the coming quarters, which will reduce FY2014 debt level by `500cr. Additionally, higher investments in inventories has led to higher working capital requirement and therefore higher interest cost. The company plans to reduce inventory to ~5,500 units (~11,000 units currently) which should lower working capital levels by `550cr.
Spare parts revenue during 3QFY2013 and 9MFY2013 stood at ~`230cr and ~`710cr respectively. Engine volumes stood at ~6,000 units. The management expects engine revenues to touch `500cr in FY2013.
The production at the Pantnagar plant is expected to be in the region of ~30,000 units in FY2013. For FY2014, the company is targeting a production of ~42,000 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 has incurred a capex of `440cr YTD in FY2013 and is targeting a capex of `600cr for the full year FY2013.
AL has invested ~`500cr YTD in 9MFY2013 in Nissan JV, John Deere JV and Hinduja Foundries. The company plans to invest `900cr in FY2013. Of the incremental `400cr investments, `150cr would be invested in Hinduja Foundries, ~125cr in Albonair and balance in Nissan JV.
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
6
Investment arguments
Volume growth to benefit from easing of interest rates and recently launched Dost: MHCV demand has witnessed a substantial slowdown in recent times due 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 AL’s MHCV volumes to register ~8% yoy growth in FY2014 (expected to post a decline of ~11% 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 40,000 units in FY2014.
EBITDA margin to improve by 80bp in FY2014: While raw-material prices have stabilized and AL continues to benefit from the ramp-up in production at the Pantnagar facility (total profitability estimated to be higher due to cost savings of ~`60,000/vehicle), the product-mix is set to change due to increasing proportion of the lower margin LCV - Dost (contribution to total volumes to increase from ~7% in FY2012 to ~28% in FY2013E). 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 100bp-150bp due to Dost sales. While we expect the margins to decline by 100bp in FY2013 to 8.8% led by higher share of Dost and higher level of discounting, we expect the margins to improve ~80bp in FY2014 to 9.6% primarily on account of revival in MHCV sales leading to operating leverage benefits, price hikes of ~1.5% each in October 2012 and January 2013 and lower levels of discounts.
Outlook and valuation
We lower our volume estimates to account for the continued weakness in the MHCV segment. We also lower our EBITDA margin estimates to factor in weak 3QFY2013 performance and higher levels of discounting in the industry. Additionally, we raise our estimates for interest outgo due to the increasing working capital requirements.
Exhibit 10: Change in estimates Y/E March Earlier Estimates Revised Estimates % chg
FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E
Net Sales (` cr) 13,350 15,300 12,910 14,836 (3.3) (3.0)
OPM (%) 9.2 10.0 8.8 9.6 (40)bp (40)bp
EPS (`) 2.0 2.6 1.5 2.2 (25.9) (14.5)
Source: Company, Angel Research
While the near term outlook for the MHCV industry remains challenging due to slowdown in overall industrial activity, we expect volumes to recover in FY2014E led by likely easing of interest rates in CY2013. At `25, AL is trading at 11.2x its FY2014E earnings. We recommend an Accumulate rating on the stock with a target price of `28.
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
7
Exhibit 11: Key assumptions
(units) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E
MHCV passenger 19,981 18,481 25,226 25,845 25,328 26,848
MHCV goods 33,071 44,345 68,007 67,408 57,971 62,609
LCV (ex. Dost) 1,379 1,100 873 1,172 1,172 1,231
Dost - - - 7,593 32,000 40,000
Total volume (units) 54,431 63,926 94,106 102,018 116,471 130,687
% yoy chg (34.7) 17.4 47.2 8.4 14.2 12.2
Domestic 47,619 57,947 83,800 89,109 106,144 118,811
Exports 6,812 5,979 10,306 12,909 10,327 11,876
Source: Company, Angel Research
Exhibit 12: Angel vs consensus forecast
Angel estimates Consensus Variation (%)
FY13E FY14E FY13E FY14E FY13E FY14E
Total op. income (` cr) 12,910 14,836 13,484 15,542 (4.3) (4.5)
EPS (`) 1.5 2.2 1.8 2.4 (17.7) (7.3)
Source: Bloomberg, Angel Research
Exhibit 13: One-year forward P/E band
Source: Company, Angel Research
Exhibit 14: One-year forward P/E chart
Source: Company, Angel Research
Exhibit 15: One-year forward EV/EBITDA band
Source: Company, Angel Research
Exhibit 16: One-year forward EV/EBITDA chart
Source: Company, Angel Research
0
5
10
15
20
25
30
35
40
45
Apr
-03
Mar
-04
Mar
-05
Mar
-06
Feb-
07
Feb-
08
Jan-
09
Jan-
10
Jan-
11
Dec
-11
Dec
-12
(`) Share Price (`) 6x 9x 12x 15x
0
5
10
15
20
25
30
35
Aug
-05
Apr
-06
Dec
-06
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-07
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-08
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-08
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(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
Jan-
04
Nov
-04
Sep-
05
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06
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-07
Feb-
08
Nov
-08
Sep-
09
Jul-1
0
Apr
-11
Feb-
12
Dec
-12
(` cr) EV (` cr) 2x 4x 6x 8x
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
10.0
Aug
-05
Mar
-06
Oct
-06
Jun-
07
Jan-
08
Aug
-08
Apr
-09
Nov
-09
Jul-1
0
Feb-
11
Sep-
11
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-12
Dec
-12
(x) One-yr forward EV/EBITDA Five-yr average EV/EBITDA
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
8
Exhibit 17: Automobile - Recommendation summary
Company Reco. CMP (`)
Tgt. price (`)
Upside (%)
P/E (x) EV/EBITDA (x) RoE (%) FY12-14E EPS
FY13E FY14E FY13E FY14E FY13E FY14E CAGR (%)
Ashok Leyland Accumulate 25 28 13.9 16.9 11.2 6.7 5.5 9.3 13.3 2.7
Bajaj Auto Neutral 2,079 - - 19.3 16.5 13.6 11.1 45.8 42.8 8.9
Hero MotoCorp Accumulate 1,764 1,923 9.0 16.7 14.7 8.4 6.9 44.3 40.9 5.3
Maruti Suzuki Neutral 1,546 - - 24.0 16.6 11.6 7.9 11.6 14.9 35.6 Mahindra & Mahindra Accumulate 900 998 10.9 16.5 14.5 9.5 7.9 24.2 23.2 15.3
Tata Motors Accumulate 301 337 10.3 8.5 7.1 4.6 3.9 30.2 27.6 12.3
TVS Motor Accumulate 43 46 8.0 9.5 7.4 4.0 3.1 17.4 19.4 5.3
Source: Company, Angel Research
Company background
Ashok 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 ~23% 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 backhoe loader (used in the construction equipment segment).
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
9
Profit and loss statement (Standalone)
Y/E March (` cr) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E
Total operating income 5,981 7,245 11,177 12,842 12,910 14,836
% chg (22.7) 21.1 54.3 14.9 0.5 14.9
Total expenditure 5,525 6,485 9,963 11,586 11,774 13,405
Net raw material costs 4,480 5,212 8,175 9,462 9,192 10,533
Other mfg costs 132 135 235 275 297 319
Employee expenses 563 667 975 1,020 1,020 1,172
Other 350 471 579 828 1,265 1,381
EBITDA 456 760 1,214 1,256 1,136 1,430
% chg (43.5) 66.6 59.8 3.5 (9.6) 25.9
(% of total op. income) 7.6 10.5 10.9 9.8 8.8 9.6
Depreciation & amortization 178 204 267 353 364 404
EBIT 278 555 946 903 773 1,027
% chg (56.0) 100.1 70.4 (4.5) (14.5) 32.9
(% of total op. income) 4.6 7.7 8.5 7.0 6.0 6.9
Interest and other charges 160 102 189 255 353 371
Other income 91 91 44 40 50 58
(% of PBT) 46.3 18.1 5.6 5.9 10.7 8.1
Recurring PBT 208 545 802 688 469 713
% chg (67.3) 161.3 47.2 (14.1) (31.8) 52.0
Extraordinary income/(exp.) 11 40 1 4 - -
PBT 197 505 800 685 469 713
Tax 18 121 171 124 75 121
(% of PBT) 9.4 24.0 21.3 18.1 16.0 17.0
PAT (reported) 190 424 631 564 394 592
ADJ. PAT 179 384 630 561 394 592
% chg (60.3) 114.6 64.2 (11.0) (29.7) 50.2
(% of total op. income) 3.0 5.3 5.6 4.4 3.1 4.0
Basic EPS (`) 0.7 1.6 2.4 2.1 1.5 2.2
Adj. EPS (`) 0.7 1.4 2.4 2.1 1.5 2.2
% chg (60.3) 114.6 64.2 (11.0) (29.7) 50.2
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
10
Balance sheet statement (Standalone)
Y/E March (` cr) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E
SOURCES OF FUNDS
Equity share capital 133 133 133 266 266 266
Reserves & surplus 3,341 3,536 3,830 3,942 4,025 4,308
Shareholders’ Funds 3,474 3,669 3,963 4,208 4,291 4,574
Total loans 1,958 2,280 2,348 2,395 2,995 3,145
Deferred tax liability 263 385 444 490 490 490
Other long term liabilities - 4 4 4
Long term provisions 78 77 77 77
Total Liabilities 5,695 6,334 6,833 7,174 7,857 8,290
APPLICATION OF FUNDS
Gross block 4,939 6,019 6,692 7,256 7,476 8,321
Less: Acc. depreciation 1,540 1,769 2,058 2,343 2,706 3,110
Net Block 3,399 4,250 4,634 4,914 4,770 5,211
Capital work-in-progress 998 561 358 548 523 582
Goodwill - - - - - -
Investments 264 326 1,230 1,534 1,571 1,575
Long term loans and advances 385 608 608 608
Other noncurrent assets 3 7 7 7
Current assets 3,166 4,152 3,984 4,304 4,818 5,315
Cash 88 519 180 33 451 374
Loans & advances 790 973 431 810 904 964
Other 2,288 2,660 3,373 3,461 3,463 3,977
Current liabilities 2,141 2,961 3,760 4,742 4,442 5,009
Net current assets 1,025 1,191 224 (438) 377 306
Misc. exp. not written off 10 5 - - - -
Total Assets 5,695 6,334 6,833 7,174 7,857 8,290
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
11
Cash flow statement (Standalone)
Y/E March (` cr) FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E
Profit before tax 208 545 802 688 469 713
Depreciation 178 204 267 353 364 404
Change in working capital (785) 264 628 518 (398) (7)
Others (18) 289 (891) (275) - -
Other income (91) (91) (44) (40) (50) (58)
Direct taxes paid (18) (121) (171) (124) (75) (121)
Cash Flow from Operations (526) 1,090 591 1,120 310 931
(Inc.)/Dec. in fixed assets (2,466) (643) (470) (755) (195) (903)
(Inc.)/Dec. in investments 346 (63) (904) (304) (37) (4)
Other income 91 91 44 40 50 58
Cash Flow from Investing (2,028) (614) (1,329) (1,019) (182) (849)
Issue of equity - - - - - -
Inc./(Dec.) in loans 1,071 322 68 47 600 150
Dividend paid (Incl. Tax) 234 156 233 309 309 309
Others 519 (523) 97 (604) - -
Cash Flow from Financing 1,823 (45) 398 (248) 291 (159)
Inc./(Dec.) in cash (731) 430 (340) (147) 419 (78)
Opening Cash balances 451 88 519 180 33 451
Closing Cash balances 88 519 180 33 451 374
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
12
Key ratios
Y/E March FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E
Valuation Ratio (x) P/E (on FDEPS) 37.2 17.3 10.6 11.9 16.9 11.2
P/CEPS 18.1 11.3 7.4 7.3 8.8 6.7
P/BV 3.2 2.8 2.5 2.3 2.2 2.0
Dividend yield (%) 2.0 3.0 4.0 4.0 4.0 4.0
EV/Sales 1.2 1.0 0.6 0.5 0.5 0.5
EV/EBITDA 18.1 10.6 6.3 6.0 6.7 5.5
EV / Total Assets 1.4 1.3 1.1 1.0 1.0 0.9
Per Share Data (`)
EPS (Basic) 0.7 1.4 2.4 2.1 1.5 2.2
EPS (fully diluted) 0.7 1.4 2.4 2.1 1.5 2.2
Cash EPS 1.4 2.2 3.4 3.4 2.8 3.7
DPS 0.5 0.8 1.0 1.0 1.0 1.0
Book Value 7.9 8.8 10.0 10.9 11.2 12.3
Dupont Analysis
EBIT margin 4.6 7.7 8.5 7.0 6.0 6.9
Tax retention ratio 0.9 0.8 0.8 0.8 0.8 0.8
Asset turnover (x) 1.7 1.7 2.3 2.3 2.2 2.3
ROIC (Post-tax) 7.1 9.7 15.2 13.2 10.9 13.4
Cost of Debt (Post Tax) 10.2 3.7 6.4 8.8 11.0 10.0
Leverage (x) 0.3 0.4 0.3 0.2 0.2 0.2
Operating ROE 6.3 12.2 17.9 14.2 10.9 14.3
Returns (%)
ROCE (Pre-tax) 6.2 9.2 14.4 12.9 10.3 12.7
Angel ROIC (Pre-tax) 6.5 12.4 17.7 15.5 12.7 15.5
ROE 6.4 10.7 16.5 13.7 9.3 13.3
Turnover ratios (x)
Asset Turnover (Gross Block) 1.5 1.3 1.8 1.8 1.8 1.9
Inventory / Sales (days) 78 75 63 63 63 63
Receivables (days) 41 50 36 34 35 35
Payables (days) 116 112 97 109 113 112
WC cycle (ex-cash) (days) 33 41 12 (6) (8) (2)
Solvency ratios (x)
Net debt to equity 0.5 0.4 0.2 0.2 0.2 0.3
Net debt to EBITDA 3.5 1.9 0.8 0.7 0.9 0.8
Interest Coverage (EBIT / Int.) 1.7 5.5 5.0 3.5 2.2 2.8
Ashok Leyland | 3QFY2013 Result Update
January 25, 2013
13
Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com DISCLAIMER This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.
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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%)
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
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