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Ashok Leyland: Net up 17% YoY

Apr 24, 2001

Ashok Leyland Ltd (ALL), the country's second largest manufacturer of commercial vehicles has reported a net profit of Rs 917 m for FY01, a growth of 16.8% YoY. The company's sales at Rs 22,524 m declined by only -0.2% YoY. This was better than the market as the industry volumes dropped by 22% for medium and heavy commercial vehicles.The company has achieved this through gains in market share from its nearest competitor, Telco. The company's market share in the commercial vehicles segment went upto 38% in FY01 as compared 33% in FY00. The company has sold 32,745 commercial vehicles in FY01 as compared to 37,859 in the previous year a decline of 14%. However last year's figure include 4,724 Stallions sold to the Indian army which in this year are accounted in the form of CKD sets.

The major gains made by the company have been in the bus segment, which is ALL's forte.

(Rs m)FY00FY01Change
Sales 22,572 22,524 -0.2%
Other Income 87 102 17.1%
Expenditure 20,053 19835-1.1%
Operating Profit (EBDIT) 2,519 2,689 6.8%
Operating Profit Margin (%)11.2%11.9% 
Interest 849 888 4.6%
Profit before Tax9341,0209.2%
Other Adjustments - -  
Tax 148 103 -30.7%
Profit after Tax/(Loss) 786 917 16.8%
Net profit margin (%)3.5%4.1% 
No. of Shares (eoy) (m) 118.9 118.9  
Diluted number of shares 118.9 118.9  
Diluted Earnings per share6.67.7 

The company has managed to increase its operating margins as the company concentrated on selling high margin buses and increased its defence supplies in 3QFY01 and 4QFY01. As the company's operating margins fell drastically in the 1HFY01, the company took measures to control overall costs to improve its margins.

Besides though it suffered on the domestic front, the company’s export sales grew by 10% during FY01 and increased contribution from spares and industrial and marine applications too added to the bottomline.

Due to prudent working capital management, the company's interest costs grew by only 4.6%. These efforts too were concentrated more in the latter two quarters of FY01.

As these results are in line with our expectations of a net profit of Rs 911 m for FY01, we are unlikely to revise our forecasts for FY02 and FY03 currently.

As both buses and medium good vehicles are poised for good growth in the current financial year, the company should benefit. The company has recently bagged an order of 2,051 CNG buses from the Delhi government and private operators, this is likely to give a boost to its margins in FY02.

On the current price of Rs 59, it is trading at only 7.7x FY01 EPS of Rs 7.7. It has declared a dividend of Rs 4 for FY01, which works out to a dividend yield of 6.8%.

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