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

Term insurance

Term insurance may not be the most-marketed product by life cos, but it’s a must-have in today’s risk-prone lifestyle WHEN was the last time your insurance agent sold a term plan to you? It’s not a very popular policy among agents, as their commission in absolute terms is low because of the low-premium. Just as agents have their self interests in mind while selling, you need to make your own decision about your insurance needs, which are unique to your family. COST ADVANTAGE A term plan is pure protection. It is the cheapest type of life insurance policy. But what you see might not be what you get, most insurers have a range of health parameters for standard rates. If any of your health parameters — weight, blood pressure for instance fall outside this range, you will pay more. For some companies, the standard range is very narrow. EARLY BIRD GAINS A 30-year-old will pay 15% more premium than a 25-year-old. At 40, the premium is double of what is applicable for a 25-year old, points...

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...

TDS Rate and Personal Account Number(PAN)

    The TDS rate doubles to 20% from 10% if you fail to mention your Personal Account Number   IF you run a glance through your pay slip, you will come across something called TDS, which is tax deduction at source. In most cases, the employer deducts this amount at the time of payment of salary itself and pays the total tax amount to the government on behalf of all the employees. If you are a self- employed or practicing professional s, you have to pay this amount yourself.    Tax deducted at source is one of the modes of income tax collection by the government. Under the income-tax laws, income tax at specified rates is required to be deducted while making certain payments.    The rate of deduction of tax at source on interest and rent payment is 10%. For salary payments, the employers deduct income tax at source on a monthly basis after computing income tax liability on estimated annual taxable income of the employee. Tax benefits on housing loan, investments, etc are consid...

L&T Tax Advantage

Best SIP Funds to Invest Online   The fund follows a growth approach to investing in quality stocks that have a large-cap tilt This large-cap tilted ELSS has fared consistently and fared better than its benchmark by posting a higher margin of outperformance. The fund follows a growth approach to investing in quality stocks that have a large-cap tilt, which is evident in its portfolio. The portfolio is further well diversified across market capitalisation and sectors with over 60 stocks finding a place in it. The upside with this fund is the fact that it has witnessed both down and up cycles of the market to come across as a winner in the long run. Do not doubt the fund based on its size and a few mediocre years of performance, because when analysing its rolling three year returns, the fund's performance stands out to qualify as a must have ELSS in one's portfolio. Stay invested through the lock-in and there are chances of benefiting from returns as well as tax savings will prov...

Tax Planning: Income tax and Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:   Provident Fund (PF) & Voluntary Provident Fund (VPF) Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free. Public Provident Fund (PPF) An account can be opened wi...
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