Skip to main content

Stock Review: ASHOK LEYLAND



Ashok Leyland results for the June 2011 quarter were broadly in line with analysts' estimates. Its operating profit margin fell marginally on a y-o-y basis to 9.8% in the first quarter of FY12, while net sales improved 6.3% to . 2,495.5 crore.


The quarterly results of the country's second largest player in the commercial vehicle (CV) segment have to be viewed in the context of a rather difficult operating environment for the broader CV sector. The company had hiked prices earlier for its CV range, given the higher input prices. However, pressure on its margins in the quarter under review was due to higher employee costs.


The company's total vehicle sales (CVs and passenger buses), including exports, fell 9.9% y-o-y to 19,277 units in the quarter under review. And in its key medium and heavy (M&H) CV segment, the company witnessed a 14.2% y-o-y decline in unit sales in the quarter.
Analysts highlight the impact of rising auto finance rates and sluggish growth in the broader industrial sector, which impacted demand for Ashok Leyland's M&H commercial vehicle range. Also, smaller players have become rather aggressive and have eaten into Ashok Leyland's market share in the M&H vehicle segment.


Higher finance costs also contributed in the 29.6% y-o-y decline in the company's net profit in the June 2011 quarter. Growth in net sales in the first quarter of FY11 was considerably weaker than that reported in the trailing four quarters ended March 2011. The stock fell 2.7% to . 50.7 on Tuesday, in broad contrast to the bullish sentiment on the Street.


Going forward, analysts are increasingly skeptical whether Ashok Leyland would be able to achieve its earlier target of total vehicle sales of 108,000 units during the year ended March 2012, a rise of nearly 14.8% y-o-y. Also, the company had guided for an operating profit margin of around 10.5% during FY12, and once again there is little clarity on that, given key commodity input prices are still at elevated levels. Ashok Leyland trades at a P/E of 11.3 times on a trailing basis and we are neutral on the stock.

 

Popular posts from this blog

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...

Benefits Of Repo Rate & CRR Rate Cut On Consumers

  How Reduction In Repo Rate & CRR Affects Customers Finally  RBI announced slashing of repo rate by 25 basis points (bps ) and cash reserve ratio (CRR) by 25 bps which industry experts believe will fuel the economic growth to some extent. Although experts were expecting higher rate cut this year. This lowering of the rate cuts has taken place for the first time in nine months. Now let's see how reducing the repo rate (defined in economic term as the rate at which RBI lends money to the banks) relates to the following individuals and sectors: Banking:   Lowering of repo rate directly reduces borrowing costs of a bank. Banks in turn reduces interest rates on different types of loans such as home, auto, business etc. Similarly trimming down of CRR allows banks to unlock money for lending to the customers i.e. with 0.25 rate cut banks are estimated to lend more than INR. 17 Crores. Consumers:   Lower repo rate does not necessarily benefit existing loan borrowers but new loan se...

Zero Coupon Bonds or discount bond or deep discount bond

A ZERO-COUPON bond (also called a discount bond or deep discount bond ) is a bond bought at a price lower than its face value with the face value repaid at the time of maturity.   There is no coupon or interim payments, hence the term zero-coupon bond. Investors earn return from the compounded interest all paid at maturity plus the difference between the discounted price of the bond and its par (or redemption) value. In contrast, an investor who has a regular bond receives income from coupon payments, which are usually made semi-annually. The investor also receives the principal or face value of the investment when the bond matures. Zero-coupon bonds may be long or short-term investments.   Long term zero coupon maturity dates typically start at 10 years. The bonds can be held until maturity or sold on secondary bond markets.

Online submission of PAN Grievances

Investors may have various grievances with respect to their PAN application, like the non-allotment of PAN or an error or mismatch in the name on the card. The Income Tax Department has an online grievance management system, which allows investors to submit their complaints pertaining to PAN applications registered with UTITSL or NSDL.Here's how you can go about lodging a PAN related complaint online. Portal Grievances related to PAN can be lodged by logging on to incometax.sparshindia.com , and going to the PAN section. Complaint menu Complaints pertaining to applications for PAN submitted either to UTITSL or NSDL can be lodged by clicking the `submit' link. On clicking this link, a form for PAN grievances is displayed. The complainant is required to choose the nature of the complaint from the dropdown menu provided on the form. Details The complainant has to provide mandatory details such as receipt or coupon number of the PAN application.The complainant's name, addre...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now