IndiaEquityResearch

Automobiles

February23,2012

AshokLeyland

BUY
TargetPrice(INR)

41 AplayonrevivalofMHCVgrowth

INITIATINGCOVERAGE

LastPrice(INR)

28
ALIN

Bloombergcode

ASOK.BO

Reuterscode
Avg.Vol.(3m)(mn)

6.60

Avg.Val.(3m)(INRmn)

171
30.6/20.0

52wkH/L(INR)

18,145

Sensex
MCAP(INRbn/USDbn)

74.77/1.52

Shareholding(%)

9/11

12/11

Promoters

38.6

38.6

MFs,FIs,Banks

15.4

15.8

FIIs

16.2

15.6

Public
Others

10.5
19.3

10.6
19.4

AL is likely to be the biggest beneficiary of any positive development in

domesticMHCVsasitderivesalargeportionofitstotalincomefromthis
segment. FY12f may end with an estimated 3% fall in sales volumes of
domestic MHCVs for AL. FY13f is likely to enjoy a recovery with double
digitgrowthdrivenbythefallininterestratesandrevivalininvestment
activity leading to rise in freight volumes. The companys focus on
increasingtouchpointsandloandisbursementsarealsolikelytoaidsales
volume growth. AL is also increasing its exposure to LCVs and other
businesses to derisk itself from the cyclicality of domestic MHCVs. We
arriveataMar13targetpriceofINR41,byapplyingthemeanEV/EBITDA
multiple of the previous CV cycle. The potential upside stands at 46%,
assumingvaluationsreverttothemean.InitiatewithBuy.Riskfactorsare
thehighexposuretoMHCVsandhighercommodityandfuelprices.
DomesticMHCVdemandlikelytorevivebyFY13f

StockChart(RelativetoSensex)

ALisaplayonthedomesticMHCVsegment,asthissegmentislikelytocontribute
over75%oftotalincomeforthecompanyoverFY12fFY14f.DomesticMHCVsales
volumegrowthislikelytorecoverto10%byFY13fafteranestimatedfallof3%in
FY12f,onaccountofapickupininvestmentactivityandfreightavailabilitydueto
thelikelyreversalintheinterestratecycle.Inaddition,higherloandisbursements
andtouchpointsarealsolikelytoaidsalesvolumegrowth.

32

28

Strengtheningexistingoperationsandenteringnewbusinesses

24

20

Feb11

Jun11

Oct11

Ashok Leyland

Feb12

Sensex Rebased

StockPerfm.(%)

1m

3m

1yr

Absolute

5.4

13.1

13.9

3.0

0.1

14.7

Rel.toSensex

To strengthen its technological capabilities, AL has invested in companies that

manufacture and supply EuroV emission compliant vehicles to developed
countries.TopenetratethehighgrowingLCVsegment,thecompanyhaslaunched
acargoLCVinJVwithNissanMotorCo(7201JP;NR)inSep11.WeestimatethisJV
tobreakevenbyFY14f.Tocontinuethediversification,ALhasalsoinvestedinnew
businesses;mostofthesebusinessesreportedlossesinFY11.Thecompanysshare
ofearningsfromthesebusinessesislikelytobreakeveninFY14f.

TotalincomegrowthtosettleataCAGRof13%overFY12fFY14f

A.PAT

6,313

5,840

6,966

Sho/s(diluted)

2,661

2,661

2,661

A.EPS(INR)

2.4

2.2

2.6

YoY(%)

48

19

We estimate a CAGR of 13% in total income over FY12fFY14f due to a revival in

domesticMHCVsalesvolumes,increasingcontributionoftheDostLCVandrobust
exports.Exportvolumegrowthislikelytobestrong,ataCAGRof19%overFY12f
FY14f,duetothegrowingacceptanceofIndianCVsindevelopingcountries.Rising
sales promotion costs, and the increasing contribution of lowmargin LCVs in the
overallproductmix,islikelytoreduceEBITDAmarginsfrom11.0%inFY11to9.8%in
FY14f.WeestimateEBITDAandPATtogrowataCAGRof9%overFY12fFY14f.

D/E(x)

0.7

0.9

0.8

InitiatewithaBuyratingandaMar13TPofINR41;upsideof46%

P/E(x)

11.8

12.8

10.7

EV/E(x)

8.5

8.9

7.8

RoCE(%)
RoE(%)

11
17

10
14

11
16

Financials(INRmn)
Sales

03/11

03/12f

03/13f

111,177

125,995

146,064

53

13

16

11.0

10.0

9.9

YoY(%)
EBITDA(%)

03/11

06/11

09/11

12/11

Sales(INRmn)

QuarterlyTrends

38,285

24,955

30,946

28,798

PAT(INRmn)

2,982

863 1,541 669

We apply an EV/EBITDA multiple of 8.6x to ALs core business to arrive at a fair

value of INR39/share. This multiple is based on the mean valuations of the
previousCVcycle.ThelikelyearningsreboundinALoverFY13fFY14fonaccount
of the recovery in domestic MHCV sales volume growth provides a buying
opportunity. We have valued ALs investment in IndusInd Bank (IIB IN, Buy) at
INR2/share. Our SOTPbased Mar13 TP for AL stands at INR41, which provides a

46%upside.InitiatewithBuy.RiskfactorsarethehighexposuretoMHCVs.
SriRaghunandhanNL,+9102266842863
raghunandhan.nl@avendus.com

Pleaserefertothedisclaimertowardstheendofthedocument.

India Equity Research

AshokLeyland

TableofContents

InvestmentSummary ........................................................................................................................ 3
DomesticMHCVdemandlikelytorecoverto10%byFY13f .................................................................3
Strengtheningexistingoperationsandenteringnewbusinesses .........................................................3
TotalincomegrowthtosettleataCAGRof13%overFY12fFY14f ......................................................3
InitiatewithaBuyratingandaMar13TPofINR41 ..............................................................................3

DomesticMHCVdemandlikelytorecoverto10%byFY13f ............................................................. 5
DomesticMHCVsalesvolumestowitnessafallof3%inFY12f............................................................5
Demandtoreviveonpickupininvestmentactivity .............................................................................5

Strengtheningexistingoperationsandenteringnewbusinesses ..................................................... 7
Strengtheningfinancingandtechnologicalcapabilities ........................................................................7
PartneringNissantoenterthehighgrowthcargoLCVsegment ..........................................................7
Diversifyingintonewbusinesses...........................................................................................................8

TotalincomegrowthtosettleataCAGRof13%overFY12fFY14f .................................................. 9
ExportstooutpacedomesticsalesvolumegrowthoverFY12fFY14f ..................................................9
EBITDAgrowthlikelytolagtotalincomegrowth..................................................................................9
FreecashflowlikelytoturnpositivebyFY13f ....................................................................................10

InitiatewithaBuyratingandaMar13TPofINR41 ........................................................................ 11
Valuingcorebusinessat8.6xEV/EBITDA ............................................................................................11
SOTPtargetofINR41;initiatecoveragewithaBuyrating..................................................................11
Riskfactors ..........................................................................................................................................12

Financialsandvaluations................................................................................................................. 13

Automobiles

India Equity Research

AshokLeyland

InvestmentSummary
AL is a play on domestic MHCVs as it derives a significant portion of its revenues from this segment. We estimate
domesticMHCVsalesvolumestofallby3%inFY12fduetopostponingofpurchasesbyfreightoperatorsonaccount
of lower freight availability. However, domestic MHCV sales volume growth is likely to recover to 10% in FY13f on
accountofapickupininvestmentactivityandfreightavailabilityduetothelikelyreversalintheinterestratecycle.
TherehasalsobeenarevivalinLCVsalesvolumegrowth(TTM);thisisusuallyaleadindicatorforarevivalinMHCV
salesvolumegrowth.ALsfocusonincreasingtouchpointsandloandisbursementsarealsolikelytoaidsalesvolume
growth.Thecompanyisalsofocusingonstrengtheningitsexistingoperationsandincreasingitspenetrationinthehigh
growing LCV segment. EBITDA margins are likely to decline from 11.0% in FY11 to 9.8% by FY14f due to rising sales
promotioncostsandtheincreasingshareofthelowmarginDostLCVintheoverallproductmix.WevalueALscore
businessatanEV/EBITDAof8.6x,whichisbasedonmeanvaluationsofthepreviousCVcycle.Afterincludingthevalue
of ALs investment in IndusInd Bank, our SOTPbased Mar13 target stands at INR41, which provides a 46% upside.
InitiatewithBuy.RiskfactorsarethehighexposuretoMHCVsandhighercommoditypricesandfuelprices.

DomesticMHCVdemandlikelytorecoverto10%byFY13f
Weestimatedomestic
MHCVsalesvolume
growthtorecoverto10%
byFY13f.

Weestimateafallof3%indomesticmediumandheavycommercialvehicle(MHCV)salesvolumesin
FY12fduetopostponingofpurchasesbyfreightoperatorsonaccountoflowerroadfreightavailability.
Inaddition,expiryoftheJawaharlalNehruNationalUrbanRenewalMission(JNNURM)schemeisalso
likelytoimpactsalesvolumes.WeestimatedomesticMHCVsalesvolumegrowthtorecoverto10%by
FY13f,onaccountofapickupininvestmentactivityandfreightavailabilityduetothelikelyreversalin
theinterestratecycle.Therehasalsobeenarevivalinsalesvolumegrowth(TTM)forlightcommercial
vehicles(LCVs);thisisusuallyaleadindicatorofarevivalinMHCVsalesvolumegrowth.AshokLeyland
(AL)isalsoincreasingitstouchpointsandrampingupdisbursementsfromitscaptivefinancedivision
toaidgrowth.

Strengtheningexistingoperationsandenteringnewbusinesses
Toincreaseitspresencein
theLCVsegment,the
companylaunchedacargo
LCVinJVwithNissan.

AL has been investing with three main objectives: 1) to strengthen financing and technological
capabilitiesincommercialvehicles(CVs);2)toincreasethepenetrationinLCVs;and3)todiversifyinto
otherbusinesses.Toaccesstechnology,ALhasincreaseditsstaketo75.1%inOptare(OPELN;NR),a
European CV manufacturer in Dec11. This was ALs second investment to access technology, post
acquisitionofAviaAshokLeylandMotors(Avia)inOct06.ToincreaseitspresenceintheLCVsegment,
thecompanylaunchedacargoLCVDostinJVwithNissanMotorCo(7201JP;NR)inSep11.We
estimatethisJVtobreakevenbyFY14f.Finally,toderiskitselffromthecyclicalityofthedomesticCV
business,thecompanyhasventuredintobusinessessuchasmanufacturingofconstructionequipment
andautomotiveinfotronics; mostofthese businessesreportedlossesinFY11.ALsshareofearnings
fromthesebusinessesislikelytobreakeveninFY14f.

TotalincomegrowthtosettleataCAGRof13%overFY12fFY14f
Exportvolumesarelikely
tobestrong,ataCAGRof
19%overFY12fFY14f,due
tothegrowingacceptance
ofIndianCVsin
developingcountries.

TherecoveryindomesticMHCVsalesvolumesandrobustexportgrowtharelikelytoresultinaCAGR
of13%intotalincomeoverFY12fFY14f.Exportvolumesarelikelytobestrong,ataCAGRof19%over
FY12fFY14f, due to the growing acceptance of Indian CVs in developing countries. We estimate the
contributionofexportstooverallsalesvolumestoincreasefrom11%inFY11to12%inFY14f.Rising
sales promotion costs and the increasing contribution of the lowmargin Dost LCV to overall sales
volumesarelikelytoreduceEBITDAmarginsfrom11.0%inFY11to9.8%inFY14f.EBITDAandPATare
likelytogrowataCAGRof9%overFY12fFY14f.

InitiatewithaBuyratingandaMar13TPofINR41
Initiatecoveragewitha
BuyratingandaMar13TP
ofINR41.

WearriveatMar13SOTPbasedtargetpriceofINR41,whichprovidesanupsideof46%.Weapplyan
EV/EBITDAmultipleof8.6xtoALscorebusinesstoarriveatafairvalueofINR39/share.Thismultipleis
basedonthemeanvaluationsofthepreviousCVcycle.ThelikelyearningsreboundinALoverFY13f

Automobiles

India Equity Research

AshokLeyland

FY14f on account of the recovery in domestic MHCV sales volume growth provides a buying
opportunity. We also value ALs investment in IndusInd Bank (IIB IN, Buy) at INR2/share. Initiate
coveragewithaBuyrating.RiskfactorsarethehighexposuretoMHCVsandhighercommodityprices
andfuelprices.
Exhibit1: OneyearforwardrollingEV/EBITDAandEV/EBITDAattargetprice
20
1yrFwdEV/EBITDA

TargetEV/EBITDA

AverageEV/EBITDA

15

10

5
Apr07

Feb08

Dec08

Oct09

Sep10

Jul11

May12

Mar13

Source:Bloomberg,AvendusResearch

Exhibit2: Valuationsummary
(INRmn)

Totalincome

EBITDA

NetProfit

EPS(INR)

P/E(x)

EV/EBITDA(x)

EV/Sales(x)

P/B(x)

Mar10

72,447

7,628

4,269

1.6

17.5

12.6

1.3

2.0

Mar11

111,177

12,176

6,313

2.4

11.8

8.5

0.9

1.9

Mar12f

125,995

12,653

5,840

2.2

12.8

8.9

0.9

1.8

Mar13f

146,064

14,405

6,966

2.6

10.7

7.8

0.8

1.6

Mar14f

161,394

15,864

8,160

3.1

9.2

6.8

0.7

1.5

Source:Company,AvendusResearch

Automobiles

India Equity Research

AshokLeyland

DomesticMHCVdemandlikelytorecoverto10%byFY13f
Weestimateafallof3%indomesticMHCVsalesvolumesinFY12fduetopostponingofpurchasesbyfreightoperators
on account of lower road freight availability. In addition, expiry of the JNNURM scheme is also likely to impact sales
volumes. We estimate domestic MHCV sales volume growth to recover to 10% by FY13f, on account of a pick up in
investment activity and freight availability due to the likely reversal in the interest rate cycle. There has also been a
revivalinsalesvolumegrowth(TTM)forLCVs;thisisusuallyaleadindicatorofarevivalinMHCVsalesvolumegrowth.
ALisalsoincreasingitstouchpointsandrampingupdisbursementsfromitscaptivefinancedivisiontoaidgrowth.

DomesticMHCVsalesvolumestowitnessafallof3%inFY12f
AL is a play on domestic MHCVsthis segment contributed c77% of total income in FY11. Any
moderation in MHCV growth is likely to affect the company more than peers, as ALs exposure to
MHCVs is higher than that for Eicher Motors (EIM IN, Add); c66% of total income in 2011) and Tata
Motors(TTMTIN,Buy);c18%oftotalincomeinFY11).
ALisaplayondomestic
MHCVsthissegment
contributedc77%oftotal
incomeinFY11.

Exhibit3: Totalincomebreakup(FY10)

Exhibit4: Totalincomebreakup(FY11)
Engines
3%

Defense&Spares11%
Engines
5%

Defense&Spares9%

Exports
10%

Exports
8%

LCVs
1%

LCVs
1%

MHCVs
75%

Source:Company

PassengerMHCVdemand
islikelytobeimpacted
duetoexpiryofthe
JNNURMschemein
Dec11.

MHCVs
77%
Source:Company

Weestimateafallof3%indomesticMHCVsalesvolumesforALinFY12f,ledbyfallof5%and2%in
passengerandcargoMHCVs,respectively.PassengerMHCVdemandislikelytobeimpactedduetothe
expiry of the JNNURM scheme in Dec11. A slowdown in passenger MHCVs sales volumes affects AL
morethanpeers,asALhasahigherproportionofpassengerMHCVsindomesticMHCVsalesvolumes
thanpeers(passengerMHCVscontributed25%,8%and11%ofdomesticMHCVsalesvolumesforAL,
EIMandTTMT,respectively,inFY11).CargoMHCVdemandislikelytobeimpactedduetopostponing
ofpurchasesbyfreightoperatorsonaccountoflowerroadfreightavailability.Inaddition,atemporary
slowdowninthesouthernregion(whichcontributesc50%ofMHCVsalesvolumesforAL)isalsolikely
toimpactsalesvolumes.

Demandtoreviveonpickupininvestmentactivity
WeestimateALsMHCVsalesvolumegrowthtorecoverto10%byFY13fonaccountofapickupin
investmentactivityandfreightavailabilityduetothelikelyreversalintheinterestratecycle.Therehas
alsobeenarevivalinsalesvolumegrowth(TTM)forLCVs;thisisusuallyaleadindicatorofarevivalin
MHCV sales volume growth. As per our observation, a revival in LCV sales volume growth is usually
followed by a revival in MHCV sales volume growth with a lag of 46 months. In line with this
hypothesis, after LCV sales volumes saw a revival in Jun11, MHCV sales volume growth (TTM)
recoveredinOct11.Thecompanyisalsoincreasingitstouchpoints(salesandservicenetwork)andis
ramping up disbursements from its financing division HindujaLeyland Finance (HLF) in order to
revivesalesvolumegrowth.

Automobiles

India Equity Research

AshokLeyland

The company increased its touch points to 378 in Sep11 from 358 in Mar11. AL plans to continue
increasing its touchpoints, especiallyin the northern and western regions,so that itcan reduce the
dependenceonthesouthernregion,whichcontributedc50%ofsalesvolumesinFY11.
WeestimateALsdomesticMHCVsalesvolumetogrowataCAGRof6%overFY12fFY14f,lowerthan
theindustryCAGRof10%.Salesvolumegrowthislikelytobebelowtheindustryaverageduetohigher
exposuretothesouthernregionandtopassengerMHCVs.Lowergrowthisalsolikelytoresultinloss
ofmarketshareforALfrom25.7%inFY11to22.7%byFY14f.
Exhibit5: DomesticMHCVsalesvolumegrowthforALandtheindustry(%)

FY06

FY07

FY08

FY09

FY10

FY11 FY12f

AL

17.7

37.1

1.8

37.5

21.3

45.4

3.4

10.2

10.5

8.2

5.6

4.5

32.8

0.4

33.2

33.5

31.7

6.3

10.0

13.9

9.2

10.1

Industry

FY13f

FY14fCAGR(FY07FY11)CAGR(FY12fFY14f)

Source:SIAM,AvendusResearch

Exhibit6: DomesticMHCVmarketshare(%)
Lowergrowthislikelyto
resultinlossofmarket
shareforALfrom25.7%in
FY11to22.7%byFY14f.

FY06

FY07

FY08

FY09

FY10

FY11

FY12f

FY13f

FY14f

AL

27.0

27.9

27.5

25.7

23.3

25.7

23.3

23.0

22.7

EIM*

7.4

6.8

8.2

7.4

8.6

9.4

10.8

10.8

10.6

TTMT

62.0

62.9

60.5

61.9

63.3

59.5

60.8

60.9

61.0

Source:SIAM,AvendusResearchNote:*IncludestradedvehiclesofVolvoAB(VOLVBSS,NR)

Automobiles

India Equity Research

AshokLeyland

Strengtheningexistingoperationsandenteringnewbusinesses
ALhasbeeninvestingwiththreemainobjectives:1)tostrengthenfinancingandtechnologicalcapabilitiesinCVs;2)to
increasethepenetrationinLCVs;and3)todiversifyintootherbusinesses.Toaccesstechnology,ALhasincreasedits
staketo75.1%inOPE,aEuropeanCVmanufacturer,inDec11.ThiswasALssecondinvestmenttoaccesstechnology,
post acquisition of Avia in Oct06. To increase its presence in the LCV segment, the company launched a cargo LCV
Dost in JV with Nissan in Sep11. We estimate this JV to breakeven by FY14f. Finally, to derisk itself from the
cyclicality of the domestic CV business, the company has ventured into businesses such as manufacturing of
construction equipment and automotive infotronics; most of these businesses reported losses in FY11. ALs share of
earningsfromthesebusinessesislikelytobreakeveninFY14f.

Strengtheningfinancingandtechnologicalcapabilities
Strengtheningthecaptivefinancedivision
WeestimateHLFto
finance10%ofALs
vehiclesindomestic
marketbyFY14f.

TTMThasahighlysuccessfulfinancingarm,whichfinanced24%ofitsCVsinthedomesticmarketin
FY11.Toreplicatethesuccess,ALhasinvestedINR1.4bninitscaptivefinancearmHLF.
In its first year of operations (FY11), HLF financed 6% of ALs vehicles in the domestic market, with
disbursementsofINR12bn.Weestimatethisratiotoincreaseto10%byFY14f.WeestimateALsshare
ofearningsthroughHLFtogrowfromINR0.3bninFY11toINR1.4bninFY14f.

StrengtheningthetechnologicalcapabilitiesinCVmanufacturing
The company has started focusing on strengthening its technological capabilities. AL has made
investmentsinOptare(OPELN,NR)andAviatoachievethisobjective.
InvestmentinOptarePlc(investmentofINR835mn)
ALacquired26.0%stakeinOPEinJul10,aUKfirmthatmanufacturespremiumandhybridbusesof
uptoEuroVemissionstandards.ALhasincreasedthisstaketo75.1%inDec11.
WeestimateOPEtobreakevenby2013fasaresultofincreasingexports,higheroutsourcingand
lower interest costs. Based on current market capitalization, the value of the investment stands
lower,atINR0.5bn.
InvestmentinAviaAshokLeylandMotors(investmentofINR1,307mn)
ALacquired48%stakeinAviainOct06,aCzechbasedfirmthatmanufacturestrucks(612tonnes
GVW)ofuptoEuroVemissionstandardsandlargelyexportsvehiclestodevelopedcountries.The
firmalsomanufactureselectrictrucks.
ALisplanningtosellAviastrucksintheMiddleEastandIndia.WeestimateALsshareofprofits
fromAviatoincreasefromINR46mnin2010toINR98mnin2013f.
Inadditiontoacquiringnewtechnologicalcapabilities,ALisalsofocusingonbackwardintegrationfor
aluminumdiecastingsinvestmentofINR350mnintheJVwithAlteams.

PartneringNissantoenterthehighgrowthcargoLCVsegment
Exhibit7: GrowthindomesticcargoLCVsandMHCVs(%)

FY07

FY08

FY09

FY10

FY11 CAGR(FY07FY11)

CargoLCVs

39.0

11.6

7.6

45.0

25.5

21.1

CAGR(FY12fFY14f)
19.9

CargoMHCVs

37.6

4.4

37.0

35.9

36.3

8.9

10.8

Source:SIAM

ThecargoLCVsegmenthaswitnessedhighergrowthandsteadierdemandpatternsincomparisonto
cargo MHCVs, mainly due to proliferation of the hub and spoke model and a shift in demand from
cargo threewheelers to LCVs. Hence, higher exposure to LCVs is an advantage for companies. AL
derived0.8%(inFY11)ofitssalesvolumesfromLCVs.

Automobiles

India Equity Research

AshokLeyland

ThecompanyistryingtoincreaseitspenetrationintheLCVsegmentthroughitsJVwithNissan.ALhas
investedINR1.8bnfor51%stakeinthisJV.ThisinvestmentislikelytobescaleduptoINR7.5bnbythe
endofFY14f.TheJVrecentlylauncheditsfirstvehicleDostinSep11.Thisvehicleislikelytocompete
withthelikesofTataAce,MahindraMaxximo,PiaggioApeTrukandForceTrumpinthecargosmall
commercialvehicle(SCV)segment.
Exhibit8: MarketshareinthedomesticcargoSCVsegment(%)

FY06

FY07

FY08

FY09

FY10

FY11

TataMotors

59.4

68.6

64.8

60.5

57.2

56.0

Mahindra&Mahindra

38.0

29.1

28.6

32.1

35.8

38.1

PiaggioVehicles

0.0

0.0

3.1

6.1

5.2

3.4

ForceMotors

2.6

2.2

3.5

1.3

1.7

2.4

HindustanMotors

0.0

0.1

0.0

0.0

0.1

0.1

Source:SIAM

WeestimatetheJVwith
Nissantobreakevenby
FY14f.

TheJVhasannualproductioncapacityof55,000vehiclesandistargetinganetworkof60dealersby
endofFY12.ThebusinessisestimatedtobreakevenbyFY14f.ThisJVisalsoplanningamultipurpose
vehicleorutilityvehiclelaunchbySep12.

Diversifyingintonewbusinesses
In an attempt to diversify, AL has entered into several new businesses such as manufacturing of
constructionequipmentandautomobileinfotronics.

JVwithJohnDeere(investmentofINR424mn)
ALenteredintoa50:50JVwithJohnDeere(DEUS,NR)tomanufactureconstructionequipment.
ThisJVhasintroduceditsfirstproductbackhoeloaderinNov11.AsALisbackwardintegratedfor
manufactureofenginesforconstructionequipment,itislikelytoresultincostsavings.
AsperEscorts(ESCIN,NR),thesizeofthebackhoeloaderandtheoverallconstructionequipment
segments is estimated at USD0.6bn and USD2.5bn, respectively. The backhoe loader segment is
likelytogrowataCAGRof14%over20122014.
Exhibit9: Estimatedsalesvolumesinbackhoeloadersandconstructionequipmentindustry(%)

2011

2012

2013

2014

CAGR(20102013)

Backhoeloaders

20,000

22,500

25,000

30,000

14.5

TotalConstructionEquipmentIndustry

54,055

62,045

69,955

79,715

13.8

Source:Escorts,AvendusResearch

JVwithContinentalAG(investmentofINR158mn)
ThecompanyhasenteredintoaJVwithContinentalAG(CONGY;NR)fordesigning,developingand
adapting infotronics products and services for automotive customers. Automobile infotronics are
information technology solutions for automobiles such as telematics, dashboard electronics and
digitaltachometers.
The initial products from this JV are likely to be dashboard electronic equipment for ALs Utruck
rangeofvehicles.
AL is likely to benefit from these investments over the long term. However the companys share of
lossesfromthesebusinessesstoodatcINR498mninFY11.Weestimatethesebusinessestoonlybreak
evenbyFY14f.

Automobiles

India Equity Research

AshokLeyland

TotalincomegrowthtosettleataCAGRof13%overFY12fFY14f
TherecoveryindomesticMHCVsalesvolumesandrobustexportgrowtharelikelytoresultinaCAGRof13%intotal
incomeoverFY12fFY14f.Exportvolumesarelikelytobestrong,ataCAGRof19%overFY12fFY14f,duetothegrowing
acceptanceofIndianCVsindevelopingcountries.Weestimatethecontributionofexportstooverallsalesvolumesto
increase from 11% in FY11 to 12% in FY14f. Rising sales promotion costs and the increasing contributionof the low
marginDostLCVtooverallsalesvolumesislikelytoreduceEBITDAmarginsfrom11.0%inFY11to9.8%inFY14f.We
estimatethisnegativeoperatingleveragetobeoffsetbypositivefinancialleverage.EBITDAandPATarelikelytogrow
ataCAGRof9%overFY12fFY14f.

ExportstooutpacedomesticsalesvolumegrowthoverFY12fFY14f
Robustgrowthinexports
islikelytocontinuedueto
growingacceptanceof
IndianCVsindeveloping
countries.

Domestic sales volumes are likely to grow by 14% over FY12fFY14f, led by recovery in MHCV sales
volume growth and robust growth in Dost LCV sales. The contribution of this LCV to overall sales
volumes and total income is likely to increase from 6% and 1% in FY11 to 17% and 2% by FY14f,
respectively.
Exports are estimated to outpace domestic sales volume growth over FY12fFY14f, with the
contribution of exports to overall sales volumes improving from 11% in FY11 to 12% in FY14f. We
estimatetherobustexportvolumegrowth(CAGRof19%overFY12fFY14f)tocontinueonaccountof
the growing acceptance of Indian CVs in developing countries, despite price hikes. Withdrawal of
exportincentivessuchastheDutyEntitlementPassBook(DEPB)haveresultedinpricehikesincargo
CVs,as passengerCVs werenot apartofthe DEPBscheme. The export of cargo CVs stoodat6% of
totalsalesvolumesinFY11.
Exhibit10: ExportincentivesunderDEPBanddutydrawbackschemes
Category

Exportincentiverates(%)

DEPBscheme

Dutydrawbackscheme

Reductioninrate

AB

CVsofupto7.5tonnesGVW

10

5.5

4.5

CVsof7.5tonnesto16.5tonnesGVW
Source:CentralBoardofExciseandCustoms

Exhibit11: Estimatedsalesvolumesandtotalincome
FY11

FY12f

FY13f

FY14f

CAGR(FY12fFY14f)

Domesticvolumes

83,799

86,667

107,279

122,609

13.5

Exportvolumes

10,306

13,137

15,186

17,356

19.0

Totalvolumes

94,105

99,804

122,464

139,965

14.1

Totalincome(INRmn)

111,177

125,995

146,064

161,394

13.2

Source:Company,AvendusResearch

WeestimatetotalincometogrowataCAGRof13%overFY12fFY14f,ledbyarecoveryindomestic
salesvolumesandrobustgrowthinexportvolumes.

EBITDAgrowthlikelytolagtotalincomegrowth
Selling,GeneralandAdministrativeexpenditureasapercentageoftotalincomeis likelytoincrease
from4.5%inFY11to5.0%byFY14fonaccountofincreasingcompetition.Highercontributionofthe
lowmargin(5%7%EBITDAmargin)DostLCVtooverallsalesvolumesisalsolikelytoimpactmargins.
EBITDA marginsare likelytodeclinefrom 11.0% in FY11to 9.8% byFY14f. The deteriorating EBITDA
margins indicate the presenceofnegativeoperating leverage.We estimate EBITDAgrowth(CAGR of
9.0%) to lag total income growth (CAGR of 13%) over FY12fFY14f. PAT growth is likely to be largely
similar(CAGRof9%)toEBITDAgrowth.

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India Equity Research

AshokLeyland

Exhibit12: EstimatedtotalincomeandEBITDA
(INRmn)

FY11

FY12f

FY13f

FY14f

CAGR(FY12fFY14f)

146,064

161,394

13.2

14,405

15,864

9.2

8,160

8.9

Totalincome

111,177

125,995

EBITDA

12,176

12,653

PAT

6,313

5,840

6,966

Source:Company,AvendusResearch

FreecashflowlikelytoturnpositivebyFY13f
WeforecastthecapexinthestandalonebusinesstoreduceinFY13fandFY14fduetoexcesscapacity.
ThisislikelytoresultinhigherfreecashflowsandlowernetdebttoequityinFY13fandFY14f.
Lowercapexislikelyto
resultinhigherfreecash
flowsandlowernetdebt
toequityinFY13fand
FY14f.

Exhibit13: Estimatedfreecashflowandnetdebttoequity
11,000

1.0
Freecashflow(INRmn)

Netdebttoequity(x)(RHS)
0.9

7,000
0.8
3,000
0.7

1,000
FY11

FY12f

FY13f

0.6
FY14f

Source:AvendusResearch

Automobiles

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India Equity Research

AshokLeyland

InitiatewithaBuyratingandaMar13TPofINR41
We arrive at a Mar13 SOTPbased target price of INR41, which provides an upside of 46%. We apply an EV/EBITDA
multiple of 8.6x to ALs core business to arrive at a fair value of INR39/share. This multiple is based on the mean
valuationsofthepreviousCVcycle.ThelikelyearningsreboundinALoverFY13fFY14fonaccountoftherecoveryin
domesticMHCVsalesvolumegrowthprovidesabuyingopportunity.WealsovalueALsinvestmentinIndusIndBankat
INR2/share. Initiate coverage with a Buy rating. Risk factors are the high exposure to MHCVs and higher commodity
pricesandfuelprices.
Weapplyan8.6x
EV/EBITDAmultipleto
arriveatourMar13fair
valueofINR39/sharefor
theCVbusiness.

Valuingcorebusinessat8.6xEV/EBITDA
WevaluethestandalonebusinessesofALatanEV/EBITDAof8.6x,basedonmeanvaluationsoverthe
previous CV cycle (Apr07Feb12). We apply this multiple to arrive at our Mar13 fair value of
INR39/sharefortheCVbusiness.
Exhibit14: OneyearforwardrollingEV/EBITDAandEV/EBITDAattargetprice
20
1yrFwdEV/EBITDA

TargetEV/EBITDA

AverageEV/EBITDA

15

10

5
Apr07

Feb08

Dec08

Oct09

Sep10

Jul11

May12

Mar13

Source:Bloomberg,AvendusResearch

The earnings growth over FY12fFY14f is lower than historical (FY08FY11) growth on account of
moderationindomesticMHCVandPVsalesvolumesinFY12f.Weestimatethistrendtoreverseover
FY13fFY14f;earningsgrowthislikelytoberobust(CAGRof18%)overFY13fFY14fonaccountofthe
likelyrecoveryindomesticMHCVsalesvolumegrowth.
Exhibit15: ComparisonofALshistoricalandfuturegrowth
Totalincomegrowth

EBITDAgrowth

*EPSgrowth

CAGRoverFY08FY11

11.6

14.7

10.4

CAGRoverFY12fFY14f

13.2

9.2

8.9

CAGRoverFY13fFY14f

13.2

12.0

18.2

(%)

Source:Company,AvendusResearchNote:*AvendusEPS

SOTPtargetofINR41;initiatecoveragewithaBuyrating
WehavevaluedALsinvestmentinIIBatitsmarketvalue.Includingthisinvestmentvaluetoourcore
businessfairvalue,wearriveatourMar13SOTPbasedtargetofINR41,whichprovidesanupsideof
46%.WeinitiatecoveragewithaBuyrating.

Automobiles

11

India Equity Research

AshokLeyland

Exhibit16: SOTPvaluation

Basisofvaluation

Corebusiness

8.6xEV/EBITDA

InvestmentinIndusIndBank

Marketvalue

Total

Equityvalue(INRmn)

Valuepershare(INR)

103,681

39

5,678

109,360

41

Source:AvendusResearch

The book value of investments in joint ventures and associates (after applying a holding company
discount of 30%) stands at cINR2/share. We do not factor in this value in our valuations as most of
thesebusinessesareestimatedtobreakevenonlybyFY14f.

Wedonotfactorthe
valueofinvestmentsin
jointventuresand
associatesinour
valuations.

Riskfactors
HigherexposuretoMHCVs:Incomparisontopeers,ALssalesvolumegrowthismorecyclicaldue
tohigherexposuretoMHCVs.
Rise in raw material prices: We have assumed stable raw material cost per vehicle over FY12f
FY14f.Ifpricesofsteel,aluminumandrubberincrease,thenthecompanysmarginsanddemand
arelikelytobeadverselyaffected.
Riseinfuelprices:AnincreaseinfuelpricesislikelytoleadtopostponementofCVpurchasesby
freightoperators,asitnegativelyimpactstheirmargins.
Exhibit17: SensitivityanalysisImpactonearningsonaccountof1%declinein:
(%)
Salesvolumes
Blendedrealizations
Rawmaterialcostpervehicle

FY12f

FY13f

3.2

2.4

FY14f
2.4

15.6

14.8

14.0

13.6

12.3

11.7

Source:AvendusResearch

Exhibit18: RelativevaluationsasonFebruary22,2012

AL

CMP Rating TargetPrice Upside PriceChange(%)

P/E
EV/E ROCE(%) ROE(%)
(INR)

(INR)
(%)
1m
3m
6m 2012f/ 2013f/ 2014f/ 2012f/ 2013f/ 2014f/
2012f/ 2012f/
FY12f FY13f FY14f FY12f FY13f FY14f
FY12f
FY12f
28

Buy

41

46

5.4

13.1

11.3

12.8

10.7

9.2

8.9

7.8

6.8

10.2

14.3

EIM*

1724

Add

1918

11

6.9

7.8

27.1

11.9

9.7

7.7

9.5

7.4

5.4

21.5

24.0

TTMT

268

Add

303

13

22.5

55.7

82.1

8.3

7.9

7.0

4.8

4.3

3.7

21.3

45.6

Source:Bloomberg,AvendusResearchNote:*YearendingDecember,ProportionateshareofEIMinVECVconsideredforratios

Automobiles

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India Equity Research

AshokLeyland

Financialsandvaluations
Incomestatement(INRmn)
Fiscal yearending
Grosssal es
Less:Exciseduty
Netsal es
Ot her operati ngincome
Totaloperatinginco me
Totaloperatingexpenses
Netmateri als
Ot her directcosts
Personnel
SG&A
R&D
EBITDA
Ot her income
Depreciat ion
EBIT
Interest
RecurringPB T
Netextraor dinaryitems
PBT(reported)
Totaltaxes
PAT(repor ted)
Add:Shareo f earningsofassociat e
Less:Minorityi nterest
Pri orperiod items
Netincome(reported)
Avendusnetincome
Divi dend +Distributiontax
Sh aresoutstanding(mn)
Avendus dilutedshares(mn)
AvendusEPS (INR )

03/10
78,726
6,279
72,447
0
72,447
64,819
52,041
1,348
6,716
4,317
397
7,628
704
2,041
6,292
811
5,480
33
5,448
1,211
4,237
0
0
0
4,237
4,269

03/11
120,936
9,759
111,177
0
111,177
99,002
80,994
2,349
9,746
5,437
476
12,176
153
2,674
9,655
1,637
8,018
0
8,018
1,705
6,313
0
0
0
6,313
6,313

03/12f
137,055
11,060
125,995
0
125,995
113,342
92,319
3,209
10,644
6,631
539
12,653
211
3,440
9,423
2,284
7,139
0
7,139
1,298
5,840
0
0
0
5,840
5,840

03/13f
158,885
12,821
146,064
0
146,064
131,658
107,002
4,106
12,241
7,684
625
14,405
185
3,671
10,920
2,284
8,636
0
8,636
1,669
6,966
0
0
0
6,966
6,966

03/14f
175,561
14,167
161,394
0
161,394
145,530
117,735
4,198
14,077
8,830
691
15,864
198
3,675
12,386
2,271
10,116
0
10,116
1,955
8,160
0
0
0
8,160
8,160

2,327

3,092

3,092

3,239

3,794

2,661
2,661
2,661
2,661
2,661
2,661
2,661
2,661
2,661
2,661
1.6 2.4 2.2 2.6 3.1

Growthratios(%)
Totaloperat ingincome
EBITDA
EBIT
RecurringPB T
Avendus net income
Avendus EPS

21.1
62.5
84.7
146.9
109.8
109.8

53.5
59.6
53.4
46.3
47.9
47.9

13.3
3.9
2.4
11.0
7.5
7.5

15.9
13.8
15.9
21.0
19.3
19.3

10.5
10.1
13.4
17.1
17.1
17.1

Operatingratios(%)
EBITDA margi n
EBITmar gin
Netpr ofitmargin
Ot her income/PBT
Effectiv e Taxrate

10.5
8.7
5.8
12.9
22.2

11.0
8.7
5.7
1.9
21.3

10.0
7.5
4.6
3.0
18.2

9.9
7.5
4.8
2.1
19.3

9.8
7.7
5.0
2.0
19.3

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India Equity Research

AshokLeyland

Balancesheet(INRmn)
Fiscal yearending
Equity capital
Preferencecapital
Reserves andsurpl us
Net worth
Mino rity interest
Totaldebt
Deferredtax liability
Totalliabilit ies
Grossblock
less:Accumulateddepreciati on
Netblock
CW IP
Goodwill
Investments
Cash
Inventories
Debtors
Loans andadvances
less:Currentliabilities
less:Prov isions
Network ingcapital
Totalassets

03/10
1,330
0
35,305
36,636
0
22,039
4,486
63,161
60,186
17,691
42,496
5,615
0
3,262
5,189
16,382
10,221
9,605
25,921
3,687
11,789
63,161

03/11
1,330
0
38,256
39,586
0
25,683
5,338
70,607
66,919
20,581
46,338
3,580
0
12,300
1,795
22,089
11,852
7,936
30,379
4,903
8,390
70,607

03/12f
2,661
0
39,674
42,334
0
32,683
5,338
80,355
76,499
24,021
52,477
3,000
0
17,300
595
23,438
13,002
7,936
32,489
4,903
7,578
80,355

03/13f
2,661
0
43,401
46,062
0
31,883
5,338
83,283
82,499
27,692
54,806
1,500
0
18,550
152
24,640
15,011
7,936
34,263
5,050
8,427
83,283

03/14f
2,661
0
47,768
50,429
0
28,583
5,338
84,350
85,499
31,368
54,131
750
0
19,800
1,175
25,680
15,942
7,936
35,459
5,605
9,669
84,350

03/10
4,237
2,041
0
2,806
704
8,379
6,285
626
0
0
0
704
6,207
0
2,457
2,327
2,006
2,136
4,308

03/11
6,313
2,674
0
6
153
8,840
4,698
9,038
0
0
0
153
13,583
0
3,644
3,092
798
1,349
3,394

03/12f
5,840
3,440
0
389
211
8,681
9,000
5,000
0
0
0
211
13,789
0
7,000
3,092
0
3,908
1,200

03/13f
6,966
3,671
0
1,291
185
9,161
4,500
1,250
0
0
0
185
5,565
0
800
3,239
0
4,039
442

03/14f
8,160
3,675
0
220
198
11,418
2,250
1,250
0
0
0
198
3,302
0
3,300
3,794
0
7,094
1,022

Cashflowstatement(INRmn)
Fiscal yearending
Netpr ofit
Depreciat ion
Deferredtax
W orkingcapital changes
Less:Otheri ncome
Cashflowfrom operations
Capitalexpendi ture
St rat egicinvestmentspurchased
Marketableinvestmentspurchased
Changeinot herloansandadvances
Goodwill paid
Ot her income
Cashflowfrom investing
Equity raised
Changeinbor rowings
Divi dendspaid(incl.tax)
Ot her s
Cashflowfrom financing
Net change incash

Automobiles

14

India Equity Research

AshokLeyland

KeyRatios
Fiscal yearending
Valuationratios(x)
P/E (o nAv endusEPS)
P/E (o nbasic,reportedEPS)
P/CEPS
P/BV
Divi dend yield(%)
Marketcap. /FCF
Marketcap. /Sales
EV/Sales
EV/EBITDA
EV/FCF
EV/TotalAssets
NetCash/ Mar ketcap.
Pershareratios(IN R)
Avendus EPS
EPS(Basic,r eported)
Cash EPS
Book Value
Divi dend pershare
RO E Decomposition(%)
EBITmar gin
Assettur nover(x)
Interestexpenserati o
Tax retent ionratio
RO A
Totalassets/equity (x)
RO E
Returnratios (%)
EBIT/CapitalEmploy ed
RO CE
RO IC
FC F/IC
OCF/Sales
FC F/Sal es
Turnoverratios (x)
Grossturnover
Nettur nover
Revenue/IC
Inventory /Sales(day s)
Receivables(days)
Payab les(days)
W orkingcapital cycle(ex cash)(days)
Solvencyratios(x)
Grossdebttoequity
Netdebtto equit y
Netdebtto EBITDA
InterestCov erage (EBIT /Interest)

03/10

03/11

03/12f

03/13f

03/14f

17.5
13.2
11.8
2.0
2.7
35.2
1.0
1.3
12.6
45.2
1.5
6.9

11.8
11.8
8.3
1.9
3.6
18.1
0.7
0.9
8.5
25.1
1.5
2.4

12.8
12.8
8.1
1.8
3.6
234.5
0.6
0.9
8.9
351.9
1.4
0.8

10.7
10.7
7.0
1.6
3.7
16.0
0.5
0.8
7.8
24.0
1.3
0.2

9.2
9.2
6.3
1.5
4.4
8.2
0.5
0.7
6.8
11.7
1.3
1.6

1.6
2.1
2.4
13.8
0.7

2.4
2.4
3.4
14.9
1.0

2.2
2.2
3.5
15.9
1.0

2.6
2.6
4.0
17.3
1.0

3.1
3.1
4.4
19.0
1.2

8.7
1.2
1.4
77.8
7.1
1.7
12.0

8.7
1.7
2.4
78.7
9.4
1.8
16.6

7.5
1.7
3.0
81.8
7.7
1.8
14.3

7.5
1.8
2.8
80.7
8.5
1.9
15.8

7.7
1.9
2.7
80.7
9.7
1.7
16.9

10.5
8.2
10.0
4.3
11.6
2.9

14.4
11.4
12.9
7.0
8.0
3.7

12.5
10.2
10.9
0.4
6.9
0.3

13.3
10.8
11.1
5.9
6.3
3.2

14.8
11.9
12.2
11.2
7.1
5.7

1.2
1.7
1.5
74.8
49.9
152.5
40.3

1.7
2.4
1.9
63.2
36.2
123.3
21.7

1.6
2.4
1.8
65.9
36.0
120.1
19.7

1.8
2.7
1.8
60.1
35.0
109.6
19.1

1.9
3.0
2.0
56.9
35.0
104.4
19.0

0.7
0.6
2.8
7.8

0.8
0.7
2.4
5.9

0.9
0.9
3.0
4.1

0.8
0.8
2.6
4.8

0.7
0.6
2.1
5.5

Automobiles

15

India Equity Research

AshokLeyland

AnalystCertification
Thefollowinganalyst(s)is(are)primarilyresponsibleforthisreportand,certifies(y)thattheopinion(s)onthesubjectcompany(ies)anditssecurity(ies)andanyotherviewsor
forecastsexpressedhereinaccuratelyreflecttheirpersonalview(s).Theyfurthercertifythatnopartoftheircompensationwas,isorwillbedirectlyorindirectlyrelatedtothe
specificrecommendation(s)orviewscontainedinthisresearchreport:SriRaghunandhanNL

Disclosures
MeaningofAvendusSecuritiesPrivateLimitedsequityresearchratings
Theratingrepresentstheexpectedchangeinthepriceofthestockoverahorizonof12months.
Buy:morethan+20%

Add:+10%to+20%

Hold:10%to+10%

Reduce:10%to20%

Sell:lessthan20%

Proportionofratingsineachcategoryandinvestmentbankingrelationships
AttheendofDecember2011

Buy

Add

Hold Reduce

Sell

NR

Total

Proportionofratingsineachcategory

32%

24%

29%

7%

0%

7%

100%

0%

13%

5%

0%

0%

20%

6%

Proportionofcompaniestowhommaterialinvestmentbankingserviceswereofferedduringtheprevious12months

Analystdisclosures
None of the analysts involved in the preparation of this research report or a member of his/her household is an officer, director or supervisory board member of any of the
company(ies)thatis/arethesubjectofthisresearchreport.Noneoftheanalystsinvolvedinthepreparationofthisresearchreportormembersofhis/herhouseholdholdany
financialinterestinthesecuritiesofthecompany(ies)thatis/arethesubjectofthisresearchreport.Noneoftheanalystsinvolvedinthepreparationofthisresearchreporthave
receivedorpurchasedsharesofthesubjectcompanypriortothepublicofferingofthoseshares

DisclosuresonpotentialconflictsofinterestforAvendusSecuritiesPrivateLimitedand/oritsassociatecompanies(Avendus)asonFebruary21,2012
Asontheabovementioneddate,theshareholdingsofAvendusdoesnotexceed5%ofthetotalissuedsharecapitalofAshokLeylandLimited(AL).Avendusdoesnotholdany
otherfinancialinterestinALthatissignificantwithregardtotheresearchrecommendation.Asontheabovementioneddate,theshareholdingsofALdoesnotexceed5%ofthe
totalissuedsharecapitalofAvendus.Avendusisnotamarketmakerorliquidityproviderinthesecuritiesoftherelevantissuerorinanyrelatedderivatives.Avendushasnotbeen
aleadmanagerorcoleadmanagerofapubliclydisclosedofferofsecuritiesofALorinanyrelatedderivativesoverthepast12months.Overthepast12months,Avendushasnot
beenpartytoanagreementwithALwithregardtotheprovisionofotherinvestmentbankingservicesthatdonotentailthedisclosureofanyconfidentialcommercialinformation.
Avendusisnotpartytoanagreementwiththesubjectcompany(ies)ofthisresearchreportwithregardtotheproductionofthisresearchreport.

Sharepricehistoryandratingchanges

44
AL(InitiatedonFeb23,12)

Rating,Date,TP(INR)
Buy,23Feb12,41

38

32

26

20
Feb11

Apr11

Jun11

Jul11

Sep11

Nov11

Dec11

Feb12

Automobiles

16

India Equity Research

AshokLeyland

Disclaimer
ThisdocumenthasbeenpreparedbyAvendusSecuritiesPrivateLimited(ASPL).Thisdocumentismeantfortheuseoftheintendedrecipientonly.Thoughdisseminationtoall
intendedrecipientsissimultaneous,notallintendedrecipientsmayreceivethisdocumentatthesametime.Thisdocumentisneitheranoffernorsolicitationforanoffertobuy
and/orsellanysecuritiesmentionedhereinand/orofficialconfirmationofanytransaction.Thisdocumentisprovidedforassistanceonlyandisnotintendedtobe,andmustnot
betakenas,thesolebasisforaninvestmentdecision.Theuserassumestheentireriskofanyusemadeofthisinformation.Eachrecipientofthisdocumentshouldmakesuch
investigationashedeemsnecessarytoarriveatanindependentevaluation,includingthemeritsandrisksinvolved,forinvestmentinthesecuritiesreferredtointhisdocument
andshouldconsulthisownadvisorstodeterminethemeritsandrisksofsuchinvestment.Theinvestmentdiscussedorviewsexpressedmaynotbesuitableforallinvestors.This
documenthasbeenpreparedonthebasisofinformationobtainedfrompubliclyavailable,accessibleresources.ASPLhasnotindependentlyverifiedalltheinformationgivenin
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representatives(ASPLanditsaffiliates)areundernoobligationtoupdateorkeeptheinformationcurrent.Also,theremayberegulatory,complianceorotherreasonsthatmay
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shallnotbeliableforanydamageswhetherdirect,indirect,specialorconsequential,includinglostrevenueorlostprofits,whichmayarisefromorinconnectionwiththeuseof
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Thiscommunicationisexemptfromthefinancialpromotionrestriction(inSection21oftheFinancialServicesAndMarketsAct,2000(FSMA))relatingtothecommunicationofan
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