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Ashok Leyland ltd Driving the Ambition

Ashok Leyland is a part of Hinduja Group Company in India. The company is

engaged in the manufacturing of commercial vehicles and associated
components. Ashok Leyland products include trucks, buses, engines,
defense and special vehicles.
Ashok Leyland ltd is one of the Top 500 Shares, identified by Dynamic
Research based on technical and fundamental research.
Ashok Leyland share price has touched a 52 week high of Rs. 112.90 on 13
-Apr -2016 and a 52 week low of Rs.73.90 on 16 -Jul -2015, and is
currently trading at Rs. 93.

Share holding
The promoters holding in the company stands at 50.38%, while Institutions and Non-Institutions held 20.19% and
29.43% respectively.

Financial Analysis
Quarterly Results
For the quarter ended 31st March 16, the total income from operations of Ashok Leyland has reported a growth of
45.77 % on q-o-q basis to Rs. 5955.28 cr as against Rs. 4085.34 cr during the last quarter. A boost in total income
from operations shows sturdy development in business.
The operating profit of Ashok Leyland on standalone has shown a growth of 97.92% q-o-q to Rs. 635.39 cr as
against Rs. 321.02 cr. This is mainly due to rise in sales of Ashok Leyland
The net profit of Ashok Leyland has declined by 61.22% q-o-q to Rs.77.02 cr as against Rs 198.63 during the
previous quarter. The turn down in net profit is on back of loss of Rs (379) crores due to Exceptional Item and
higher tax cost. Exceptional loss was because of provisions for impairment in investments in some joint ventures in
addition to overseas subsidiaries.

Annual Results
For the year ended March 31, 2016 Ashok Leyland on Consolidated basis reported net sales of Rs. 20658.71 cr
compared to Rs. 15340.89 crores FY2015, registering growth of 34.66% YOY.
For the year ended March 31, 2016 Ashok Leyland on Consolidated basis reported net profit of Rs. 1070.68 cr
compared to profit of Rs. 133.89 cr FY2015.

Ratio analysis
Debt Equity Ratio: 0.44, which indicates that Ashok Leyland operates with a very minimal level of debt.

Interest Coverage Ratio: 3.19, which indicate that Ashok Leyland can easily meet up with the interest expenses
pertaining to its debt obligations.
Current Ratio: 1.49, which indicates that Ashok Leyland is able to meet its short term obligations easily.
Return on Asset: 5.71%, which indicates management is reasonably, using its assets to produce earnings.
Return on Equity: 26.96%, this indicates that Ashok Leyland has generated a good amount of profit on money
invested by the equity shareholders.

Investment Rationale

Ashok Leyland witnessed a modest recovery in the Indian economy, enabling the Medium & Heavy
Commercial Vehicle industry to hint an uptrend after two years of down cycle.
Ashok Leyland is India's 2 largest commercial vehicle maker.
Ashok Leyland is planning to set up a bus assembly plant in Kenya as part of its global expansion plans; the
company will invest Rs 70 crore.
The new plant in Kenya will have an annual capacity of 1,200 buses and will serve at least 3 neighboring
countries, besides catering to local demand.
The company also has a manufacturing facility at Ras Al Khaimah in the UAE, which was set up as a joint
venture with Ras Al Khaimah Investment Authority.
Ashok Leyland has got a massive order of 3,600 buses from State transport undertakings for FY17, this will
add anywhere between Rs. 450-600 crore to the companys revenue.
Medium and heavy commercial vehicle sales rose by 34 % to 35246 units and light commercial vehicle
sales grew by 11% to 8745 units YoY
Growth in export volume by 31.7 percent and maintaining leadership position in Middle East, Sri Lanka
and Africa.
Ashok Leyland is continually developing and launching new and improved products to stay ahead of
competition. In both the value and premium product segments.
The companys excellent performance is seen in its annual results as the net profit of Ashok Leyland has
jumped from a profit of Rs 133.89 cr in 2015 to Rs 1070.68 cr in the 2016. At CMP of Rs.93.50 the stock
is trading at a P/E of 36.65. We recommend a buy on the stock with a price target of Rs. 125.

Above is the weekly chart of Ashok Leyland which shows that the stock has take support of its monthly level (4
month low) low of Rs.91.

The investment advice or guidance provided by way of recommendations, reports or other ways are
solely the personal views of the research team. Users are advised to use the data for the purpose of
information and rely on their own judgment while making investment decision.
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Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its
Associates/ Research Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any
compensation or other benefits
from the subject company, nor engaged in market making
activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Ammar Ali Mirza