AshokLeyland-4QFY2012RU-150512 by mnmgroup

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									                                                                                               4QFY2012 Result Update | Automobile
                                                                                                                              May 15, 2012



 Ashok Leyland                                                                                  BUY
                                                                                                CMP                                     `26
 Performance Highlights                                                                         Target Price                            `33
 Y/E March (` cr)              4QFY12       4QFY11     % chg (yoy)     Angel est.     % diff    Investment Period             12 Months
 Net sales                         4,311      3,848          12.0         4,298         0.3
 EBITDA                             470        508           (7.5)          464         1.2    Stock Info
 EBITDA margin (%)                  10.9       13.2       (230)bp           10.8      10bp     Sector                             Automobile
 Reported PAT                       259        298          (13.2)          253         2.4    Market Cap (` cr)                        6,878
 Source: Company, Angel Research                                                               Beta                                       0.7
                                                                                               52 Week High / Low                       33/20
 Ashok Leyland (AL) reported an in-line results for 4QFY2012 led by a strong
                                                                                               Avg. Daily Volume                    807,083
 volume growth of 20.2% yoy (53.7% qoq) aided by increasing contribution
                                                                                               Face Value (`)                              1
 from the recently launched light commercial vehicle (LCV) Dost, ~14% of
                                                                                               BSE Sensex                            16,328
 total volumes in 4QFY2012. Due to attractive valuations we maintain our
                                                                                               Nifty                                    4,943
 Buy rating on the stock.
                                                                                               Reuters Code                        ASOK.BO
 In-line results for 4QFY2012: For 4QFY2012, AL reported an in-line revenue
                                                                                               Bloomberg Code                           AL@IN
 growth of 12% yoy (48.5% qoq) drive by a strong 20.2% yoy growth in volumes,
 which was partially offset by 6.8% yoy (3.4% qoq) decline in net average
 realization. While volume growth was supported by the incremental volumes from                Shareholding Pattern (%)
 Dost; net average realization declined led by adverse product-mix (higher                     Promoters                                 38.6
 contribution from lower priced Dost) and higher level of discounts. EBIDTA                    MF / Banks / Indian Fls                   20.1
 margins came in at 10.9% (down 230bp yoy and up 366bp qoq) impacted on                        FII / NRIs / OCBs                         30.6
 account of weaker product mix and high other expenditure. Other expenditure                   Indian Public / Others                    10.7
 increased primarily on account of increase in advertising and brand building
 expenses (`6cr) and higher R&D spends (`10cr) during the quarter. Further,
 AL also incurred a MTM loss of `15cr on forex liabilities. As a result, operating             Abs. (%)                  3m       1yr     3yr

 profit declined by 7.5% yoy to `470cr. Net profit, however, declined by 13.2% yoy             Sensex               (10.3) (11.9)        34.1

 to `259cr led by higher interest (up 32% yoy on higher working capital                        Ashok Leyland        (11.6)     4.4 135.4

 requirements) and depreciation expense (up 24% yoy) .

 Outlook and valuation: At `26, AL is trading at attractive valuations of 8.8x its
 FY2014E earnings. We maintain our Buy rating on the stock with a target price of
 `33, valuing the stock at 11x its FY2014E earnings.

 Key financials
  Y/E March (` cr)                         FY2011     FY2012E        FY2013E        FY2014E
  Net sales                                11,177      12,842         14,798         16,687
  % chg                                      50.9         14.9          15.2           12.8
  Net profit                                 631          564            645           791
  % chg                                      64.6       (10.6)          14.3           22.6
  EBITDA (%)                                 10.9          9.8            9.6           9.6
  EPS (`)                                     2.4          2.1            2.4           3.0
  P/E (x)                                    11.0        12.2           10.7            8.8
  P/BV (x)                                    2.6          2.4            2.1           1.9
  RoE (%)                                    16.5        13.8           14.7           16.5
  RoCE (%)                                   14.1        12.8           13.8           15.0
  EV/Sales (x)                                0.7          0.6            0.5           0.4    Yaresh Kothari
                                                                                               022-3935 7800 Ext: 6844
  EV/EBITDA (x)                               6.7          6.2            5.7           4.8
                                                                                               yareshb.kothari@angelbroking.com
 Source: Company, Angel Research

Please refer to important disclosures at the end of this report                                                                            1
                                                                                               Ashok Leyland | 4QFY2012 Result Update



Exhibit 1: Quarterly performance
Y/E March (` cr)                      4QFY12         4QFY11        yoy chg (%)         3QFY12      qoq chg (%)          FY2012         FY2011      chg (%)
Net Sales                                  4,311       3,848                12.0        2,903                48.5       12,842         11,177        14.9
Consumption of RM                          3,026       2,712                11.6        1,992                51.9        8,954          7,899        13.4
(% of Sales)                                70.2            70.5                          68.6                            69.7           70.7
Staff Costs                                 247             302            (18.2)         272                (9.4)       1,020            960         6.3
(% of Sales)                                 5.7             7.8                             9.4                              7.9         8.6
Purchase of traded goods                    183              64            184.7          156                17.1             507         273        85.6
(% of Sales)                                 4.3             1.7                             5.4                              4.0         2.4
Other Expenses                              385             262             47.1          272                41.6        1,104            831        32.8
(% of Sales)                                 8.9             6.8                             9.4                              8.6         7.4
Total Expenditure                          3,841       3,340                15.0        2,693                42.6       11,586          9,963        16.3
Operating Profit                            470             508             (7.5)         210               123.4        1,256          1,214         3.5
OPM                                         10.9            13.2                             7.2                              9.8        10.9
Interest                                     72              55             32.0             60              20.0             255         189        35.1
Depreciation                                 96              77             23.8             87              10.3             353         267        31.9
Other Income                                 11              16            (30.5)             9              27.0              40             44     (9.2)
PBT (excl. Extr. Items)                     313             392            (20.1)            72             334.7             688         802       (14.1)
Extr. Income/(Expense)                       (2)               -                -             0                  -             (2)             -         -
PBT (incl. Extr. Items)                     314             392            (19.7)            72             336.9             690         802       (13.9)
(% of Sales)                                 7.3            10.2                             2.5                              5.4         7.2
Provision for Taxation                       56              93            (40.4)             5        1,000.6                124         171       (27.3)
(% of PBT)                                  17.7            23.9                             7.0                          18.0           21.3
Reported PAT                                259             298            (13.2)            67             286.7             566         631       (10.3)
PATM                                         6.0             7.7                             2.3                              4.4         5.6
Equity capital (cr)                         266             266                           266                                 266         266
EPS (`)                                      1.0             1.1           (13.2)            0.3            286.7             2.1         2.4       (10.3)
Source: Company, Angel Research



Exhibit 2: Volume performance
(units)                           4QFY12       4QFY11        yoy chg (%)            3QFY12 qoq chg (%)           FY2012              FY2011        chg (%)
MHCV passenger                     8,767           6,960           26.0              5,625          55.9             25,845          25,226           2.5
MHCV goods                        21,731       22,460              (3.2)            14,697          47.9             67,408          68,007          (0.9)
LCV (ex. Dost)                       297             260           14.2                403         (26.3)             1,172            873           34.2
Total volume (ex. Dost)           30,795       29,680               3.8             20,725          48.6             94,425          94,106           0.3
Dost                               4,893                -              -             2,490          96.5              7,383               -              -
Total volume (incl. Dost)         35,688       29,680              20.2             23,215          53.7        101,808              94,106           8.2
Exports (inc. above )              4,123           3,513           17.4              3,017          36.7             12,909          10,306          25.3
Source: Company, Angel Research


                                                   Net sales up 12% yoy on 20.2% yoy growth in volumes: AL reported an in-line
                                                   12% yoy (48.5% qoq) growth in net sales to `4,311cr, led by strong volume growth
                                                   of 20.2% yoy (53.7% qoq). Volume performance was boosted by the recently
                                                   launched LCV Dost, which accounted for ~14% of total sales during the quarter.
                                                   While volumes in the MHCV goods segment declined by 3.2% yoy, MHCV
                                                   passenger volumes jumped by 26% yoy. Net average realization, however,
                                                   witnessed a decline of ~6.8% yoy (down 3.4% qoq), largely on account of higher
                                                   contribution from the lower priced Dost vehicles and higher levels of discounts.

May 15, 2012                                                                                                                                             2
                                                                                                                                                          Ashok Leyland | 4QFY2012 Result Update



Exhibit 3: Volumes up 20.2% yoy aided by Dost sales                                                                    Exhibit 4: Net average realization down 6.8% yoy
 (units)                              Total volumes                              yoy chg (%)                  (%)        (`)                                    Net average realisation                                        yoy chg (%)                  (%)
40,000                    178.2                                                                               200.0    1,350,000                                                                                                                            25.0
                                                                                                                                                                                                         18.0              18.7
35,000        138.9                                                                                                    1,300,000                                                                                                                            20.0
                                                                                                              150.0                                                                           13.9
30,000                                                                                                                 1,250,000                                                                                                                            15.0
25,000                               72.0                                                                     100.0    1,200,000                                                    7.2                                                                     10.0
20,000                                                                                                                 1,150,000                                                                                                        3.5
                                                                                          25.9      20.2      50.0                          1.0                                                                                                             5.0
15,000                                          14.3       15.0                                                        1,100,000                                          0.0
                                                                     (9.9)     (3.9)                                                                                                                                                                        0.0
10,000                                                                                                                 1,050,000
                                                                                                              0.0                                                                                                                                 (6.8)
 5,000                                                                                                                                                    (7.5)                                                                                             (5.0)
                                                                                                                       1,000,000
         0                                                                                                    (50.0)     950,000                                                                                                                            (10.0)
                4QFY10


                            1QFY11


                                       2QFY11


                                                  3QFY11


                                                            4QFY11


                                                                      1QFY12


                                                                                 2QFY12


                                                                                           3QFY12


                                                                                                     4QFY12




                                                                                                                                            4QFY10


                                                                                                                                                              1QFY11


                                                                                                                                                                           2QFY11


                                                                                                                                                                                     3QFY11


                                                                                                                                                                                              4QFY11


                                                                                                                                                                                                         1QFY12


                                                                                                                                                                                                                           2QFY12


                                                                                                                                                                                                                                         3QFY12


                                                                                                                                                                                                                                                   4QFY12
Source: Company, Angel Research                                                                                        Source: Company, Angel Research



Exhibit 5: Net sales up 12% yoy                                                                                        Exhibit 6: Domestic market share trend
 (`cr)                                   Net sales                             yoy chg (%)                    (%)       (%)                 M&HCV passenger                                   M&HCV goods                                     Total M&HCV
5,000                    157.3                                                                                180.0    60.0
4,500        141.3                                                                                            160.0                                                                 48.9
                                                                                                                       50.0                                                                    45.1                                                         43.5
4,000                                                                                                                                                                  41.4                                                                       42.9
                                                                                                              140.0                                                                                          39.9                   40.2
3,500                                                                                                                          37.9
                                                                                                              120.0    40.0                      35.7
3,000
                                                                                                              100.0            26.6              27.0                  27.6                    27.2                                                         25.5
2,500                                72.0                                                                              30.0                                                                                                         23.7
                                                                                                              80.0                                                                  20.4                     22.2                                 21.0
2,000
1,500                                                                                                         60.0     20.0    24.4              25.3                  24.9                    24.6
                                                           30.9                           30.4                                                                                                                                                              22.3
                                                22.5                                                          40.0                                                                                                                  21.1
1,000                                                                          14.0                                                                                                                          19.2                                 17.8
                                                                     6.3                            12.0               10.0                                                         15.6
  500                                                                                                         20.0
    0                                                                                                         0.0       0.0
              4QFY10


                          1QFY11


                                     2QFY11


                                                3QFY11


                                                           4QFY11


                                                                     1QFY12


                                                                                2QFY12


                                                                                          3QFY12


                                                                                                    4QFY12




                                                                                                                                   4QFY10


                                                                                                                                                     1QFY11


                                                                                                                                                                       2QFY11


                                                                                                                                                                                    3QFY11


                                                                                                                                                                                                4QFY11


                                                                                                                                                                                                                  1QFY12


                                                                                                                                                                                                                                    2QFY12


                                                                                                                                                                                                                                                  3QFY12


                                                                                                                                                                                                                                                             4QFY12
Source: Company, Angel Research                                                                                        Source: Company, SIAM, Angel Research



                                                                                           EBITDA margin recovers sequentially to 10.9%: For 4QFY2012, AL’s EBITDA
                                                                                           margin recovered 366bp sequentially to 10.9% primarily due to higher operating
                                                                                           leverage. However, margins witnessed a 230bp of contraction on a yoy basis led
                                                                                           by weaker product mix, higher discounts and higher other expenditure. Other
                                                                                           expenditure jumped 47.1% yoy (41.6% qoq) on forex loss of `15cr, one time
                                                                                           charge on marketing and brand building of `6cr, R&D expenditure of `16cr, and
                                                                                           transportation cost of moving vehicles from Pantnagar to Southern India of `25cr.
                                                                                           Higher other expenses was partially offset by lower staff cost (down 18.2% yoy and
                                                                                           9.4% qoq), primarily due to actuarial gains and lower bonus provision for FY2012
                                                                                           on account of lower profits. As a result, the company’s operating profit declined
                                                                                           7.5% yoy (up 123.4% qoq on higher volumes and margin expansion) to `470cr.




May 15, 2012                                                                                                                                                                                                                                                          3
                                                                                                                              Ashok Leyland | 4QFY2012 Result Update



Exhibit 7: EBITDA margin inches up to 10.9%                                                       Exhibit 8: Net profit down 13.2% yoy
 (%)                      EBITDA margin                   Raw material cost/sales                  (` cr)                       Net profit                   Net profit margin                 (%)
80.0                                                                                               350                                            7.7                                          9.0
                                                                                                            7.6
70.0                                                                                               300                                                                                         8.0
       73.2      73.9         73.6      73.2                           73.5     75.9     75.8                                                                                         6.0
                                                 72.8        72.1                                                               6.2                                                            7.0
60.0                                                                                               250               5.2                                            5.0                        6.0
50.0
                                                                                                   200                                                                                         5.0
40.0                                                                                                                                                       3.5
                                                                                                   150                                                                                         4.0
30.0                                                                                                                                                                         2.3
                                                                                                                                         1.9                                                   3.0
20.0   12.9                                      13.2                                              100
                 10.0         11.3                            9.4      10.7              10.9                                                                                                  2.0
                                        7.5                                     7.2
10.0                                                                                                50                                                                                         1.0
 0.0                                                                                                  0                                                                                        0.0




                                                                                                            4QFY10


                                                                                                                     1QFY11


                                                                                                                                2QFY11


                                                                                                                                         3QFY11


                                                                                                                                                  4QFY11


                                                                                                                                                           1QFY12


                                                                                                                                                                    2QFY12


                                                                                                                                                                             3QFY12


                                                                                                                                                                                      4QFY12
        4QFY10


                 1QFY11


                               2QFY11


                                        3QFY11


                                                 4QFY11


                                                              1QFY12


                                                                       2QFY12


                                                                                3QFY12


                                                                                         4QFY12
Source: Company, Angel Research                                                                   Source: Company, Angel Research


                                                                           Net profit down 13.2% yoy: Net profit at `259cr (down 13.2% yoy) was in-line with
                                                                           our estimates benefitting from lower tax rate led by higher R&D spends. However
                                                                           increase in interest (up 32% yoy on higher working capital requirements) and
                                                                           depreciation expense (up 24% yoy) impacted the company’s bottom-line
                                                                           performance. Sequentially, net profit increased 286.7% yoy led by sharp
                                                                           improvement in operating performance and high other income.




May 15, 2012                                                                                                                                                                                         4
                                                                                      Ashok Leyland | 4QFY2012 Result Update



                                            Investment arguments
                                                Volume growth to benefit from easing of interest rates and recently launched
                                                Dost: MHCV demand has witnessed a slowdown in recent times due to high
                                                interest rates and slowdown in industrial activity; however, we believe MHCV
                                                demand is near its trough. With easing of interest rates we expect pick-up in
                                                industrial activity, leading to a rebound in MHCV sales. Further, recently
                                                introduced LCV - Dost (through JV with Nissan) have been received well by the
                                                markets and AL expects to ramp-up the production in FY2013E. As such we
                                                expect AL to register a strong ~20% volume CAGR over FY2012-14E.

                                                EBITDA margin pressures to persist due to change in product-mix: While the
                                                raw-material prices have stabilized and AL continues to benefit from the
                                                ramp-up in production at Pantnagar facility (profitability estimated to be
                                                ~25% higher due to cost savings of ~`35,000/vehicle); the product-mix is set
                                                to change due to increasing proportion of lower margin LCV Dost
                                                (contribution to total volumes to increase from ~7% in FY2012 to ~23% in
                                                FY2013E). AL has indicated that it earns marketing/distribution fees of
                                                `15,000-`18,000/vehicle on Dost sales and expects margins to be impacted
                                                by 50-100bp going ahead.

                                            Outlook and valuation

                                            At `26, AL is trading at attractive valuations of 8.8x its FY2014E earnings. We
                                            maintain our Buy rating on the stock with a target price of `33, valuing the stock at
                                            11x its FY2014E earnings.

Exhibit 9: Key assumptions
(units)                           FY2009          FY2010             FY2011               FY2012           FY2013E               FY2014E
MHCV passenger                    19,981          18,481             25,226                25,845           27,396                30,135
MHCV goods                        33,071          44,345             68,007                67,408           72,801                80,081
LCV (ex. Dost)                     1,379              1,100               873               1,172            1,348                  1,483
Dost                                    -                 -                  -              7,383           30,000                34,500
Total volume (units)              54,431          63,926             94,106               101,808          131,544               146,199
% yoy chg                          (34.7)              17.4               47.2                8.2                29.2                11.1
Domestic                          47,619          57,947             83,800                88,899          116,699               129,126
Exports                            6,812              5,979          10,306                12,909           14,845                17,072
Source: Company, Angel Research



                                            Exhibit 10: Angel vs. consensus
                                                                  Angel estimates              Consensus                  Variation (%)
                                                                 FY13E           FY14E      FY13E      FY14E            FY13E       FY14E
                                            Net sales (` cr)    14,798           16,687    14,512     16,363              2.0             2.0
                                            EPS (`)                 2.4             3.0        2.6         3.2           (8.1)       (6.5)
                                            Source: Bloomberg, Angel Research




May 15, 2012                                                                                                                                5
                                                                                                                                                                                                                     Ashok Leyland | 4QFY2012 Result Update



Exhibit 11: One-year forward P/E band                                                                                                                                     Exhibit 12: One-year forward P/E chart
 (`)                              Share Price (`)                            6x                     9x                  12x                             15x                (x)                                       One-yr forward P/E                                                Five-yr average P/E
 45                                                                                                                                                                        35
 40                                                                                                                                                                        30
 35
                                                                                                                                                                           25
 30
 25                                                                                                                                                                        20
 20                                                                                                                                                                        15
 15
                                                                                                                                                                           10
 10
   5                                                                                                                                                                        5
   0                                                                                                                                                                        0
                                                    Dec-05




                                                                                                                                 Jun-10
                                        Jan-05
       Apr-03




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                         Feb-04




                                                                  Nov-06


                                                                                    Oct-07


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                                                                                                                                                                                                                                                                                                                  Feb-11


                                                                                                                                                                                                                                                                                                                                    Sep-11
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                                                                                                                                                                                                            Oct-06




                                                                                                                                                                                                                                                                                        Nov-09
Source: Company, Angel Research                                                                                                                                           Source: Company, Angel Research



Exhibit 13: One-year forward EV/EBITDA band                                                                                                                               Exhibit 14: One-year forward EV/EBITDA chart
 (` cr)                                EV (` cr)                       2x                          4x                   6x                              8x                  (x)                        One-yr forward EV/EBITDA                                                        Five-yr average EV/EBITDA
14,000                                                                                                                                                                     10.0
                                                                                                                                                                            9.0
12,000
                                                                                                                                                                            8.0
10,000                                                                                                                                                                      7.0
 8,000                                                                                                                                                                      6.0
                                                                                                                                                                            5.0
 6,000
                                                                                                                                                                            4.0
 4,000                                                                                                                                                                      3.0
 2,000                                                                                                                                                                      2.0
                                                                                                                                                                            1.0
          0                                                                                                                                                                 0.0
                                                   Jul-05




                                                                                                   Jul-08




                                                                                                                                                      Jul-11
                              Jan-04




                                                                           Jan-07




                                                                                                                        Jan-10
                Apr-03




                                                             Apr-06




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                                                                                                                                                               Apr-12
                                          Oct-04




                                                                                        Oct-07




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                                                                                                                                                                                                        Jul-06



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                                                                                                                                                                                                                                                                                                                           May-11
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                                                                                                                                                                                                                                                                Dec-08
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                                                                                                                                                                                                                                                                                                             Nov-10



                                                                                                                                                                                                                                                                                                                                      Oct-11
Source: Company, Angel Research                                                                                                                                           Source: Company, Angel Research



Exhibit 15: Automobile - Recommendation summary
                                                                                                 CMP Tgt. price                                    Upside                  P/E (x)                                   EV/EBITDA (x)                                          RoE (%)                              FY11-14E EPS
Company                                      Reco.
                                                                                                  (`)        (`)                                      (%)                FY13E             FY14E                 FY13E                        FY14E                  FY13E                       FY14E                       CAGR (%)
Ashok Leyland                                Buy                                                  26                      33                        26.5                  10.7                8.8                         5.7                       4.8                    14.7                   16.5                                         7.8
Bajaj Auto                                   Accumulate                                      1,609                   1,811                          12.6                  14.4               13.3                         8.7                       7.5                    43.1                   37.1                                         8.3
Hero MotoCorp                                Buy                                             1,893                   2,280                          20.5                  13.5               12.8                         7.4                       5.8                    54.8                   43.3                                       13.8
Maruti Suzuki                                Buy                                             1,215                   1,510                          24.3                  14.0               12.1                         8.7                       6.9                    15.3                   15.4                                         8.3
M&M                                          Buy                                                 657                    802                         21.9                  14.7               13.5                         7.8                       6.7                    18.8                   18.1                                         4.1
Tata Motors                                  Accumulate                                          290                    328                         12.9                   7.5                6.8                         4.7                       4.1                    39.8                   33.9                                       14.5
TVS Motor                                    Buy                                                  35                      55                        60.8                   6.9                6.2                         2.9                       2.5                    18.9                   18.2                                         8.6
Source: Company, Angel Research




May 15, 2012                                                                                                                                                                                                                                                                                                                                        6
                                                  Ashok Leyland | 4QFY2012 Result Update



               Profit & Loss Statement
               Y/E March (` cr)               FY09     FY10     FY11    FY12E     FY13E    FY14E
               Total operating income         6,098    7,407   11,177   12,842    14,798   16,687
               % chg                          (23.1)    21.5     50.9     14.9      15.2     12.8
               Total Expenditure              5,642    6,648    9,963   11,586    13,377   15,085
               Net Raw Materials              4,480    5,212    8,173    9,462    10,906   12,298
               Other Mfg costs                 132      135      168      193       222      250
               Personnel                       563      667      960     1,020     1,184    1,335
               Other                           467      634      663      911      1,065    1,201
               EBITDA                          456      760     1,214    1,256     1,421    1,602
               % chg                          (43.5)    66.6     59.8      3.5      13.1     12.8
               (% of Net Sales)                 7.5     10.3     10.9      9.8       9.6      9.6
               Depreciation & Amortization     178      204      267      353       381      397
               EBIT                            278      555      946      903      1,040    1,204
               % chg                          (56.0)   100.1     70.4     (4.5)     15.1     15.8
               (% of Net Sales)                 4.6      7.5      8.5      7.0       7.0      7.2
               Interest & other charges        160      102      189      255       290      266
               Other Income                      91      91       44        40       46       50
               (% of PBT)                      46.3     18.1      5.5      5.8       5.8      5.1
               PBT (reported)                  208      545      802      688       797      989
               % chg                          (67.3)   161.3     47.2    (14.1)     15.7     24.1
               Extraordinary Expense/(Inc.)      11      40         -       (2)        -        -
               PBT (adjusted)                  197      505      802      690       797      989
               Tax                               18     121      171      124       151      198
               (% of PBT)                       9.4     24.0     21.3     18.0      19.0     20.0
               PAT (reported)                  190      424      631      566       645      791
               ADJ. PAT                        179      384      631      564       645      791
               % chg                          (60.3)   114.6     64.6    (10.6)     14.3     22.6
               (% of Net Sales)                 2.9      5.2      5.6      4.4       4.4      4.7
               Basic EPS (`)                    0.7      1.6      2.4      2.1       2.4      3.0
               Adjusted EPS (`)                 0.7      1.4      2.4      2.1       2.4      3.0
               % chg                          (60.3)   114.6     64.6    (10.6)     14.3     22.6




May 15, 2012                                                                                    7
                                               Ashok Leyland | 4QFY2012 Result Update



               Balance Sheet
               Y/E March (` cr)            FY09    FY10    FY11    FY12E   FY13E   FY14E
               SOURCES OF FUNDS
               Equity Share Capital         133     133     133     266     266     266
               Reserves & Surplus          3,341   3,536   3,830   3,942   4,276   4,756
               Shareholders’ Funds         3,474   3,669   3,963   4,208   4,542   5,022
               Total Loans                 1,958   2,280   2,658   2,399   2,899   2,649
               Deferred Tax Liability       263     385     444     490     490     490
               Total Liabilities           5,695   6,334   7,065   7,097   7,931   8,161
               APPLICATION OF FUNDS
               Gross Block                 4,939   6,019   6,692   7,498   8,086   8,385
               Less: Acc. Depreciation     1,540   1,769   2,058   2,411   2,791   3,189
               Net Block                   3,399   4,250   4,634   5,087   5,295   5,197
               Capital Work-in-Progress     998     561     358     375     404     419
               Goodwill                        -       -       -       -       -       -
               Investments                  264     326    1,230   1,534   1,534   1,534
               Current Assets              3,166   4,152   4,367   4,915   5,595   6,472
               Cash                          88     519     180      33     202     390
               Loans & Advances             790     973     794    1,336   1,480   1,669
               Other                       2,288   2,660   3,394   3,547   3,914   4,414
               Current liabilities         2,141   2,961   3,528   4,818   4,902   5,466
               Net Current Assets          1,025   1,191    839      97     693    1,006
               Mis. Exp. not written off     10       5       4       4       4       4
               Total Assets                5,695   6,334   7,065   7,097   7,931   8,161




May 15, 2012                                                                          8
                                                 Ashok Leyland | 4QFY2012 Result Update



               Cash Flow Statement
               Y/E March (` cr)                FY09    FY10      FY11    FY12E     FY13E   FY14E
               Profit before tax                197     505       802       688     797     989
               Depreciation                     178     204       267       353     381     397
               Change in Working Capital      (785)     264        13       648    (428)   (125)
               Less: Others                      (7)    329     (276)          -       -       -
               Other income                     (91)    (91)      (44)      (40)    (46)    (50)
               Direct taxes paid                (18)   (121)    (171)     (124)    (151)   (198)
               Cash Flow from Operations      (526)    1,090      591     1,522     552    1,013
               (Inc.)/Dec. in Fixed Assets   (2,466)   (643)    (470)     (823)    (618)   (314)
               (Inc.)/Dec. in Investments       346     (63)    (904)     (304)        -       -
               Other income                      91      91        44        40      46      50
               Cash Flow from Investing      (2,028)   (614)   (1,329)   (1,087)   (572)   (264)
               Issue of Equity                     -       -         -         -       -       -
               Inc./(Dec.) in loans           1,071     322       378     (260)     500    (250)
               Dividend Paid (Incl. Tax)        234     156       233       321     311     311
               Others                           519    (523)    (213)          -       -       -
               Cash Flow from Financing       1,823     (45)      398     (580)     189    (561)
               Inc./(Dec.) in Cash            (731)     430     (340)     (146)     169     188
               Opening Cash balances            451      88       519       180      33     202
               Closing Cash balances             88     519       180        33     202     390




May 15, 2012                                                                                   9
                                                        Ashok Leyland | 4QFY2012 Result Update



               Key Ratios
               Y/E March                                 FY09   FY10   FY11   FY12E   FY13E   FY14E
               Valuation Ratio (x)
               P/E (on FDEPS)                            38.8   18.1   11.0    12.2    10.7     8.8
               P/CEPS                                    18.8   11.8    7.7     7.5     6.8     5.8
               P/BV                                       3.3    3.0    2.6     2.4     2.1     1.9
               Dividend yield (%)                         1.9    2.9    3.8     3.8     3.8     3.8
               EV/Sales                                   1.3    1.0    0.7     0.6     0.5     0.4
               EV/EBITDA                                 18.7   11.0    6.7     6.2     5.7     4.8
               EV / Total Assets                          1.5    1.3    1.2     1.1     1.0     0.9
               Per Share Data (`)
               EPS (Basic)                                0.7    1.4    2.4     2.1     2.4     3.0
               EPS (fully diluted)                        0.7    1.4    2.4     2.1     2.4     3.0
               Cash EPS                                   1.4    2.2    3.4     3.5     3.9     4.5
               DPS                                        0.5    0.8    1.0     1.0     1.0     1.0
               Book Value                                 7.9    8.8   10.0    10.9    12.2    14.0
               Dupont Analysis
               EBIT margin                                4.6    7.5    8.5     7.0     7.0     7.2
               Tax retention ratio                        0.9    0.8    0.8     0.8     0.8     0.8
               Asset turnover (x)                         1.7    1.7    2.2     2.3     2.4     2.6
               ROIC (Post-tax)                            7.1    9.7   14.8    13.1    13.8    15.0
               Cost of Debt (Post Tax)                   10.2    3.7    6.0     8.3     8.9     7.7
               Leverage (x)                               0.3    0.4    0.4     0.3     0.2     0.2
               Operating ROE                              6.3   12.2   17.9    14.3    15.0    16.4
               Returns (%)
               ROCE (Pre-tax)                             6.2    9.2   14.1    12.8    13.8    15.0
               Angel ROIC (Pre-tax)                       6.5   12.4   17.0    15.7    16.2    18.6
               ROE                                        6.4   10.7   16.5    13.8    14.7    16.5
               Turnover ratios (x)
               Asset Turnover (Gross Block)               1.5    1.4    1.8     1.8     1.9     2.0
               Inventory / Sales (days)                    76    73     63      63      62      62
               Receivables (days)                          40    49     36      35      35      35
               Payables (days)                            114   110     92     105     109     109
               Working capital cycle (ex-cash) (days)      33    40     22      10       7      12
               Solvency ratios (x)
               Net debt to equity                         0.5    0.4    0.3     0.2     0.3     0.1
               Net debt to EBITDA                         3.5    1.9    1.0     0.7     0.8     0.5
               Interest Coverage (EBIT / Interest)        1.7    5.5    5.0     3.5     3.6     4.5




May 15, 2012                                                                                    10
                                                                                         Ashok Leyland | 4QFY2012 Result Update


 Research Team Tel: 022 – 3935 7800                 E-mail: research@angelbroking.com                   Website: www.angelbroking.com

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 Disclosure of Interest Statement                                             Ashok Leyland
 1. Analyst ownership of the stock                                                  No
 2. Angel and its Group companies ownership of the stock                            No
 3. Angel and its Group companies' Directors ownership of the stock                 No
 4. Broking relationship with company covered                                       No

 Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.



 Ratings (Returns):              Buy (> 15%)                      Accumulate (5% to 15%)                 Neutral (-5 to 5%)
                                 Reduce (-5% to 15%)              Sell (< -15%)


May 15, 2012                                                                                                                             11

								
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