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Ashok Leyland: Volume woes! - Views on News from Equitymaster
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Ashok Leyland: Volume woes!
Nov 16, 2016

Ashok Leyland Limited has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). The quarter turned out to be sloppy for the industry and Ashok Leyland. Revenue declined by 6.9% YoY and adjusted net profits were up 7.5% YoY.

Performance summary
  • For 2QFY17, the revenue declined by 6.9% YoY. The fall in revenue was due to poor volume performance. Overall volumes for the quarter declined by 10.3% YoY. This was partly due to the high base quarter last year.
  • However, given the robust product mix and price hikes in the domestic market, realizations were up 3.2% YoY.
  • Operating profits were down by 14% YoY, with margins contracting by 90bps to 10.9%. Even though raw material costs continued to benefit the company (down 9.5% YoY), other expenditure increased by 15% YoY.
  • Adjusted net profits were up by 7.5% YoY. This was primarly driven by lower interest cost (down 46% YoY) and foreign exchange gain.
  • For 1HFY17, revenues grew marginally by 0.6% YoY and adjusted net profits were up by 13.5% YoY.

    Consolidated Financial Performance Snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    No. of Vehicles sold 37,279 33,440 -10.3% 65,530 64,605 -1.4%
    Net sales 52,744 49,116 -6.9% 93,898 94,430 0.6%
    Expenditure 46,503 43,751 -5.9% 83,679 84,244 0.7%
    Operating profit (EBDITA) 6,240 5,365 -14.0% 10,219 10,185 -0.3%
    EBDITA margin (%) 11.8% 10.9% -90.84 10.9% 10.8% -9.67
    Other income 454 316 -30.4% 660 701 6.3%
    Depreciation 1,231 1,261 2.4% 2,369 2,471 4.3%
    Interest 631 339 -46.2% 1,332 677 -49.1%
    Profit before tax 4,833 4,081 -15.6% 7,178 7,738 7.8%
    Exchange Profit/Loss -79 66 -260 562
    Exceptional item -1,570 -1,570
    Tax 1,461 1,202 -17.7% 2,181 2,449 12.3%
    Profit after tax / (loss) 1,722 2,944 71.0% 4,737 4,282 -9.6%
    Other Comprehensive Income -49 31 -73.338 -60
    Adjusted Net Profit 2,768 2,975 7.5% 4,664 5,295 13.5%
    Net profit margin (%) 5.2% 6.1% 80.89 5.0% 4.5%
    No. of shares (m) 28.5
    Diluted earnings per share (Rs)* 3.0
    Price to earnings ratio (x)* 29.47

    *trailing twelve-month earnings

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