R K Global Shares & Securities Ltd-Private Client Research | Equity Research For Private Client Circulation 1

Ashok Leyland Limited | Automobiles Result Update | 1st February, 2012

18.98

Market Data*

Bloomberg Code AL.IN Reuters Code ASOK.BO Sensex/Nifty Close 17431.8/5269.9 Dividend Yield (%) 3.5 52 Week High/Low 29.9/20.1 Equity Capital(` mn) 2660.7 Face Value (`) 1 Market Cap (` mn) 75962.3 Avg.10 day NSE Vol. 69150909 Source: Ace Equity, R K Global Research, *as on 1st Jan’12

Key Market Ratio* Latest TTM EPS (`) 2.3 Book Value (`) 10.8 TTM PE (x) 12.5 TTM PBV (x) 2.6 EV/TTM EBITDA (x) 7.6 EV/TTM Sales (x) 0.8 Market Cap/TTM sales (x) 0.6 Source: Ace Equity, R K Global Research, *as on 1st Feb’12

Share-Holding Pattern (%)*

Source: Ace Equity, R K Global Research *As on 31st Dec’12

Price vs Sensex

Source: Ace Equity, BSE, R K Global Research

38.6%

16.5%

10.7%

34.1%

Promoters FII's Public Others

50

60

70

80

90

100

110

120

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12

Sensex Ashok Leyland

Ashok Leyland Limited (ALL) posted Q3FY12 top-line growth of 29% YoY to `28797.9mn, while it’s EBITDA margin fell by 116bps on Y-o-Y basis. ALL’s PAT stood at `669mn, an increase of 54% as compared to same period last year.

ALL reported a 29% YoY (-6.9% decline on Q-o-Q) growth in its top-line to `28797mn, on account of 23.8% YoY increase in volume sales. On a sequential basis, the volume decline by 1.5% while realization per vehicle declined 5.6% during the same period. Total expenditure for the period under review increased by 29% YoY, of which, Purchase of finish goods surged (150% YoY), manufacturing cost rose (42% YoY) and raw material cost (20% YoY). However, better product mix helped the company to increase its revenue. Sales surge by 23.8% YoY, while exports beg off. 14.1% YoY.

ALL MDV goods vehicle sales volume surged 23.5% YoY (-15.7% QoQ) to 14309 units in Q3FY12. Company’s total domestic sales increased 36.4% YoY (decline 1% QoQ). Passenger vehicle segment also witnessed a slight fall in volume to 1.6% YoY (2.7% QoQ) to 6781units in Q3FY12. ALL’s average realization increased by 4.4 % YoY (a decline of 5% QoQ) ALL’s EBITDA per vehicle rose 3.0% YoY (a decline of 36.5% QoQ) to `93575 in Q3FY12 compared to `90958 same period last year. While PAT per vehicle surge 24.6% YoY basis (-55.9% QoQ) to `29309 in Q3FY12 equated same period last year. EBITDA margin declined by 116bps YoY Operating profit for the period under review stood at 7.4% to `2103.7mn in Q3FY12, a decline of 116bps compared same period last year. However PAT margin increased stood at 2.3%, compared to 1.9% same period last year. The EBIT margin increased 20 bps to 2.5% in Q3FY12.

PAT fall on account of Bonus to employees.

On sequential basis ALL’s PAT decline 56% QoQ to stand at `669

mn, compared to `1540.8 mn in Q1FY12, mainly due to increase in

marketing expenses and Bonus issued to employees. While,

effective tax rate crashed by whopping 1490 bps on incurring

higher R&D capital expenditure boosting the net profit by robust

54% YoY.

Key Con Call Extracts:

Volume guidance for FY12 is 9% targeting 1.0 lakh vehicles and aimed at achieving 10% operating margins.

The company is expected to launch 3 tonne LCV in Q1FY13. The company hoped to ramp up production to around 4000

units per month, from around 3000 per month currently to achieve its market share target.

The company is targeting a 25% market share by the end of the current fiscal year. Presently it is having 23% market share pan India.

CMP-` 26.8 Not Covered

Research Analyst:

Aditya Vikram Jha

aditya.jha@rkglobal.in

R K Global Shares & Securities Ltd-Private Client Research | Equity Research For Private Client Circulation 2

Ashok Leyland Limited | Automobiles

Quarterly Financial Review

Financials (` mn) Q3FY12 Q3FY11 Y-o-Y (%) Q2FY12 Q-o-Q (%)

Vehicle Sold 22827 18437 23.8% 23167 -1.5%

Revenue 28797.9 22272.4 29.3% 30945.7 -6.9%

Total Expenditure 26694.3 20618.7 29.5% 27634.2 -3.4%

% of Total Net Sales 92.7% 92.6% - 89.3% -

(Increase) / Decrease In Stocks -1033.8 -1493.9 -30.8% 1629.4 -163.4%

Purchase of Finished Goods 1564.7 609.0 156.9% 924.7 69.2%

% of Total Net Sales 5.4% 2.7% - 3.0% -

Cost of Services & Raw Materials 20756.6 17178.6 20.8% 20203.3 2.7%

% of Total Net Sales 72.1% 77.1% - 65.3% -

Operating & Manufacturing Expenses 2683.4 1885.8 42.3% 2361.7 13.6%

% of Total Net Sales 9.3% 8.5% - 7.6% -

Employee Cost 2723.2 2439.2 11.6% 2515.1 8.3%

% of Total Net Sales 9.5% 10.9% - 8.2% -

PBIDT (Excl OI) 2103.7 1653.7 27.2% 3311.5 -36.5%

Other Income 32.3 23.2 39.1% 103.3 -68.7%

Operating Profit 2136.0 1677.0 27.4% 3414.8 -37.4%

Interest 550.1 474.8 15.9% 626.9 -12.3%

PBDT 1585.9 1202.2 31.9% 2787.8 -43.1%

Depreciation 866.3 646.9 33.9% 859.3 0.8%

PBT 719.6 555.3 29.6% 1928.5 -62.7%

Tax 50.6 121.6 -58.4% 387.7 -86.9%

Profit After Tax 669.0 433.7 54.3% 1540.8 -56.6%

EPS (`) 0.3 0.2 47.1% 0.6 -56.9%

Margin Ratios Q3FY12 Q3FY11 Y-o-Y (%) Q2FY12 Q-o-Q (%)

EBDITM 7.3% 7.4% -1.6% 10.7% -31.7%

OPM 7.4% 7.5% -1.5% 11.0% -32.8%

EBDTM 5.5% 5.4% 2.0% 9.0% -38.9%

EBTM 2.5% 2.5% 0.2% 6.2% -59.9%

PATM 2.3% 1.9% 19.3% 5.0% -53.3%

Operating Metrics Q3FY12 Q3FY11 Y-o-Y (%) Q2FY12 Q-o-Q (%)

Total Income/Vehicles 1261575 1208030 4.4% 1335767 -5.6%

Material cost per units 909304 931746 -2.4% 872071 4.3%

Staff cost per units 119298 132301 -9.8% 108566 9.9%

Other exp. per units 117556 102285 14.9% 101941 15.3%

EBITDA/Vehicles 93575 90958 2.9% 147401 -36.5%

Net Profit/Vehicles 29309 23522 24.6% 66509 -55.9%

Volume Performance Q3FY12 Q3FY11 Y-o-Y (%) Q2FY12 Q-o-Q (%)

Production 23867 19291 23.7% 21242 12.4%

Sales 22827 18437 23.81% 23167 -1.5%

Domestic 19808 14924 32.7% 19939 -0.7%

Export 3019 3513 -14.1% 3228 -6.5%

R K Global Shares & Securities Ltd-Private Client Research | Equity Research For Private Client Circulation 3

Ashok Leyland Limited | Automobiles

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