Mehabe score: 0 G Factor: 3 Piotski Score: 4 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 4.
Description
Ashok Leyland is the flagship Company of the Hinduja group, having a long-standing presence in the domestic medium and heavy commercial vehicle (M&HCV) segment. The company has a strong brand and well-diversified distribution and service network across the country and has a presence in 50 countries, it is one of the most fully-integrated manufacturing companies. Its headquarter is in Chennai
They manage driver training institutes across India and have trained over 8,00,000 drivers since inception.
Main Points
Segment Performance
M&HCV Truck Segment
Its trucks segment ranges from 2.5T GVW (Gross Vehicle Weight) to 55T GTW and some of its product are DOST, AVTR, PARTNER, etc #
It is the 14th largest manufacturer of trucks globally #
In FY20, it witnessed a steep decline in volume by 54%, with market share standing at 28.9% in the Domestic M&HCV Trucks Segment
It launched India’s first-ever BS-VI compliant with i-Gen6 technology AVTR truck under the modular platform for the medium & heavy range in FY20Site:ASHOKLEY
Market Cap:
Rs 34,698 cr
Price:
118.0
Trading pe:
x
Book-value:
26.5/share
Div yield:
0.42 %
Earning yield:
2.96%
Face-value:
1.00/share
52week high:
138.90
52week low:
46.60
Technical Analysis
Stock trades at 118.0, below its 50dma 121.36. However it is trading above its 200dma 106.59. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 121.36.
The 52 week high is at 138.90 and the 52week low is at 46.60
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Stock is trading at 4.45 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -1.76% over past five years.
– has a low return on equity of 9.23% for last 3 years.
Competition
– The industry trades at a mean P/E of 0.0x. Tata Motors trades at the industry’s max P/E of 0.0x. ASHOKLEY trades at a P/E of x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 5.0. ASHOKLEY has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 0.7%. The max 1- month return was given by Tata Motors: a return of 6.07 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 8142.0 cr compared to Rs 5088.0 cr for period ended Mar 2020, a rise of 60.0%
Operating Profits reported at Rs 1013.0 cr for period ended Mar 2021 vis-vis 705.0 for period ended Mar 2020 .
Operating Margins contracted -141.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 1.2 compared to Rs 0.05 for previous quarter ended Dec 2020 and Rs 0.06 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 19454.0 cr for period ended Mar 2021 vis-vis sales of Rs 21951.0 cr for the period ended Mar 2020, a fall of 12.8%. The 3 year sales cagr stood at -13.1%.
Operating margins shrank to 13.0% for period ended Mar 2021 vis-vis 15.0% for period ended Mar 2020, contraction of 200.0 bps.
Net Profit reported at Rs -165.0 cr for period ended Mar 2021 vis-vis sales of Rs 337.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -2.0% compared to 9.0% over the last 3 Years. – The stock has given a return of 121% on a 1 Year basis vis-vis a return of -4% over the last 3 Years. – The compounded sales growth on a TTM bassis is -11% vis-vis a compounded sales growth of -13% over the last 3 Years. – The compounded profit growth on a TTM basis is -147% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 18.08% vis-vis 16.3% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 13.58% vis-vis 14.44% for Dec 2020
Conclusion
– – Stock is trading at 4.45 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -1.76% over past five years.
– has a low return on equity of 9.23% for last 3 years.
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 121.36 and is trading at 118.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
