EQUITIES

Ashok Leyland share price falls 4% from day’s highs as Hinduja Group flagship reports Rs 57 crore loss

Ashok Leyland stock price plummeted 4.2% from the day’s high on Friday, after the Hinduja Group flagship firm reported a loss of Rs 57 crore in the January-March quarter, against a profit of Rs 653 crore in the same period last year. Income dropped massively for the company as it only managed to generate income of Rs 3,872 crore in the said quarter against Rs 8,855 in the same period last year. Ashok Leyland shares were trading at a price of Rs  52.3 per share during the day on Friday, a fall of 4.2% from the opening market price of Rs 54.6 per share.

The automobile major only managed to sell 25,504 units between January and March. The sales figure for the same period a year ago was recorded at 59,521 units. EBITDA margins declined by close to 630 basis points on-year basis to 4.8% due to higher staff cost and adverse operating leverage.  EBITDA declined 81% from the previous year. “This clubbed with higher depreciation/interest cost resulted in recurring loss of Rs 11.8 crore,” said brokerage and research firm Motilal Oswal. The stock trades at FY22E 9.7x EV/EBIDTA and 1.9x P/BV, the brokerage firm said.

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“Ashok Leyland reported highly subdued March quarter results due to negative operating leverage on account of significant decline of over 60% on-year in its M&HCV volumes during the quarter. We expect tough times for the CV industry over the next 2 quarters, while this industry would bounce back strongly in FY22 with more than 100% On-year jump in volumes,” said Mitul Shah, VP Research, Reliance Securities 

The management commentary, post the March quarter results, reiterated the focus on cost reduction programmes. Ashok Leymand’s management said the company is focussing on preserving cash, in which its prior efforts have helped, and that the company is conserving resources for future growth initiatives. Shares of Ashok Leyland have surged over 54% from their March lows.

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