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Ashok leyland valuation

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equity valuation of ashok leyland stock

equity valuation of ashok leyland stock

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Ashok leyland valuation Ashok leyland valuation Presentation Transcript

  • ASHOK LEYLAND LTD. Company Analysis 6 sep 2008
  • Ashok Leyland – Business Overview
    • 5000 Crore Company in Indian CV Industry
    • No. 2 Manufacturer or Commercial Vehicles
    • Market Share 28 % and No 1 in bus segment
    • Current capacity of 84000 Vehicles which would be doubled by 2010.
    • 6 plants and another 1 coming up at Uttaranchal
    PRODUCT SEGMENTS Buses TRUCKS DEFENCE VEHICLES, Spares Entering into Design & OEM services
  • Indian Automobile Industry - overview
    • Auto companies continue to reel under pressure on the back of turbulent macro economic factors
    • BSE Auto Index turned in a relatively better performance in FY2008 underperformed the broader markets by 6.8% while the Sensex lost ground by almost 14%.
    • However, during first quarter of 2009, the Auto Index declined another 20.8% after the 20.2% fall witnessed during 4QFY2008
  • Growth Divers
    • Strong Performance of Indian Economy
    • Regulations on overloading and over-aged vehicles will be Tightened
    • Private bus demand will continue to grow with better road connectivity
    • Efficient Infrastructure Investments
      • Golden Quadrilateral Project 5864 Kms
      • NSEW corridor Project 7300 Kms
      • Port Connectivity & others 1016 Kms
      • 48 New Project covering more than 10000 Kms coming up
    • source : NHAI
  • Concern Areas
    • Inflation, Interest Rates & Liquidity
      • RBI hiked CRR by 125 bps & Repo by 75 bps in last 3 months so financing rates gone up by 300 bps YTD
      • Conversion Ratio dropped by 45 % in last 4-5 months
    • Fuel Price Hike
      • Fuel Accounts for 25 % & 50% for total ownership cost of PV’s & CV’s
      • Almost 15% Hike in Fuel Prices In 2008
      • direct impact on the ownership cost, freight operator's profitability and volume growth of the Auto sector
      • Soaring Raw Material Prices
      • Accounts for 70 % of total cost for Manufacturers
      • Prices on a upward trend since last 2 years
      • Badly affecting the margins as these costs cannot be passed on to customers due to high competition
  • Impact of Interest Rates
  • Ashok Leyland – Shareholding Pattern
  • Ashok Leyland Capacity Expansion plan
  • Financial Performance FY07 FY08 Change Revenues Rs. Cr 8514 9179 7.81% EBITDA 708 895 26.48% EBIT 555 721 29.75% PAT 364 469 29.11% EPS 3.33 3.53 6.01% ROCE 16.87 20.11 19.20% DPS 1.5 1.5 Margins Operating Profit margin 9.32 10.09 Gross Profit margin 7.27 7.86 Net Profit margin 5.94 5.83
  • Peer Comparison Ashok Leyland Tata Motors Swaraj Mazda CMP 34 (Face Value = 1) 420 296 P/E 9.61 8.64 10.83 NPM % 5.83 6.96 3.75 Last Dividend 150 % 150 % 55 % EPS 3.53 49.65 24 ROE 22.3 25.98 27 ROCE 20.11 19.8 21.50
  • Valuation CMP = 34
    • FCFF Valuation 44.44 (Undervalued)
    • Weighted Average Method 52.78 (Undervalued)
    • PV method 30 (Over Valued)
  • Valuation - FCFF
    • THANK YOU
    • Enquires & comments
    • R S Raghav
    • ICFAI Business School
    • [email_address]