1. 1QFY2011 Result Update| Automobile
July 28 2010
Ashok Leyland NEUTRAL
CMP Rs73
Performance Highlights Target Price -
Y/E March (Rs cr) 1QFY11 1QFY10 % chg (yoy) Angel Est % Diff Investment Period -
Net Sales 2,348 913 157 2,660 (11.7)
S tock Info
Operating Profit 235 11.1 2,017 293 (19.6)
S ector Automobile
OPM (%) 10.0 1.2 881bp 11 (97)bp
Market Cap (R s cr) 9,578
Reported PAT 123 8.0 1,480 155 (21.1)
Beta 1.1
Source: Company, Angel Research
52 Week High / L ow 74/32
Ashok Leyland (ALL) registered a substantial 157% yoy growth in net sales for
Avg. Daily Volume 1,024,177
1QFY2011. However, lower-than-expected growth in other businesses (engine
and spare parts) restricted higher growth. Net average realisation declined due to Face Value (R s ) 1
the increase in excise duty and change in product mix. EBITDA margins came in BS E S ens ex 17,957
lower than our expectation at 10%. Net profit jumped on higher top-line and Nifty 5,398
improved operating leverage. We have revised our estimates upwards by ~3-4%
to account for the lower tax rate. R euters Code AS OK.BO
Bloomberg Code AL @IN
Strong volumes support healthy 157% growth in top-line; OPM’s up yoy on higher
operating leverage: For 1QFY2011, ALL reported a 157% yoy growth in net sales
to Rs2,348cr (Rs913cr), which was below our expectation. The jump in sales came
on the substantial 178% yoy growth in volumes. Net average realisation however, S hareholding P attern (% )
declined by 7.4% yoy owing to lower growth in other non-cyclical businesses like P romoters 38.6
engine and defense. During 1QFY2011, ALL witnessed 881bp yoy increase in MF / Banks / Indian Fls 23.9
EBITDA margin mainly on the back of improved operating leverage. Net profit
FII / NR Is / OCBs 27.9
surged1,480% yoy to Rs123cr (Rs7.8cr) on a low base, robust volume growth and
better operating performance. Indian P ublic / Others 9.6
Outlook and Valuation: Overall outlook for the domestic CV industry is
positive with volumes expected to grow 16-18% yoy in FY2011. A majority of
Abs . (% ) 3m 1yr 3yr
the factors that drive freight demand and consequently M&HCV demand have
turned positive and the CV manufacturers are expected to benefit from the S ens ex 3.3 17.1 17.9
economic recovery going forward. We recommend a Neutral on the stock As hok L eyland 30.0 107.1 94.6
owing to the recent run up in the stock price. Our fair value for ALL works out
to Rs73, at which level the stock would trade at 14x FY2012E earnings. We
prefer Tata Motor in the CV space as it is trading at reasonable discount in
relative terms.
Key Financials
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 6,098 7,407 9,793 11,389
% chg (23.1) 21.5 32.2 16.3
Net Profit 178.8 383.6 575.5 689.8
% chg (60.3) 114.6 50.0 19.9
EBITDA (%) 7.5 10.2 10.4 10.5
EPS (Rs) 1.3 2.9 4.3 5.2
P/E (x) 53.9 25.1 16.8 14.0
Vaishali Jajoo
P/BV (x) 4.6 4.1 3.7 3.2 022-4040 3800 Ext: 344
RoE (%) 6.8 11.9 15.1 16.7 vaishali.jajoo@angeltrade.com
RoCE (%) 6.2 9.2 11.3 12.6
EV/Sales (x) 1.7 1.4 1.1 1.0 Yaresh Kothari
EV/EBITDA (x) 25.3 15.1 11.8 10.1 022-4040 3800 Ext: 313
yareshb.kothari@angeltrade.com
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1

2. Ashok Leyland |1QFY2011 Result Update
Exhibit 1: Quarterly performance
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY10 FY09 % chg
Net Sales 2,348 913 157.3 7,407 6,098 21.5
Consumption of RM 1,665.2 611.8 172.2 4,966.7 4,277.9 16.1
(% of Sales) 70.9 67.0 67.1 70.1
Staff Costs 202.5 144.1 40.5 671.6 563.1 19.3
(% of Sales) 8.6 15.8 9.1 9.2
Purchases of TG 69.4 50.9 36.4 244.9 202.2 21.1
(% of Sales) 3.0 5.6 3.3 3.3
Other Expenses 175.5 94.6 85.6 768.7 599.3 28.3
(% of Sales) 7.5 10.4 10.4 9.8
Total Expenditure 2,113 901 134 6,652 5,643 17.9
Operating Profit 235.4 11.1 2,016.9 755.2 456.0 65.6
OPM (%) 10.0 1.2 10.2 7.5
Interest 31.6 25.8 22.6 101.9 160.3 (36.5)
Depreciation 61.5 43.5 41.3 204.1 178.4 14.4
Other Income 4.7 60.6 (92.2) 95.5 91.2 4.7
PBT (excl. Extr. Items) 147.0 2.4 5,926.2 544.8 208.5 161.3
Extr. Income/(Expense) - - - 40.1 11.2 -
PBT (incl. Extr. Items) 147.0 2.4 5,926.2 504.7 197.2 155.9
(% of Sales) 6.3 0.3 6.8 3.2
Provision for Taxation 24.4 (5.3) - 121.1 18.5 556.4
(% of PBT) 16.6 (218.0) 24.0 9.4
Reported PAT 122.6 7.8 1,480.4 383.6 178.8 114.6
PATM (%) 5.2 0.9 5.2 2.9
Equity capital (cr) 133.0 133.0 133.0 133.0
EPS (Rs) 0.9 0.1 1,480.4 2.9 1.3 114.6
Source: Company, Angel Research
Exhibit 2: Quarterly volume performance
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY10 FY09 % chg
M&HCV Passenger 5,088 2,485 104.7 18,480 19,745 (6.4)
M&HCV Goods 16,039 4,977 222.3 44,348 33,349 33.0
LCV 275 231 19.0 1,247 1,350 (7.6)
Total Volume 21,402 7,693 178.2 64,075 54,444 17.7
Export (Inc. Above) 1,940 903 114.8 5,934 6,812 (12.9)
Source: Company, Angel Research
Strong volumes support healthy 157% growth in top-line: For 1QFY2011, ALL
reported a 157% yoy growth in net sales to Rs2,348cr (Rs913cr), which was below
our expectation. The jump in sales came on the substantial 178% yoy growth in
volumes. Net average realisation however, declined by 7.4% yoy owing to lower
growth in other non-cyclical businesses like engine and defense.
Engine volumes dropped to ~4,000 units (~4,500 units) with revenues of Rs74cr
for 1QFY2011. Defense revenues also declined to Rs12cr (Rs28cr in 4QFY2010),
with the company selling around ~140 kits in 1QFY2011 (~400 kits in
4QFY2010). The spare parts business recorded ~12% yoy growth to Rs137cr in
1QFY2011.
July 28 2010 2

3. Ashok Leyland |1QFY2011 Result Update
Exhibit 3: Net sales up 157% on 178% volume growth Exhibit 4: Revival in M&HCV segment boosts volume
(Rs cr) (%) (Units) (%)
4,000 225 30,000 225
157.3
141.3 178
3,000 150 22,500 150
81.4 139
101
2,000 75 15,000 75
(7.3)
1,000 0 7,500 0
(15.7) (58) (17)
0 (75)
0 (75)
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
Net Sales (LHS) Net Sales Growth (RHS) ALL total volumes yoy change
Source: Company, Angel Research Source: Company, Angel Research
Exhibit 5: Segment-wise market share trend
(%) M&HCV passenger M&HCV goods Total M&HCV
60
43.0
45 39.0 37.9
36.1
29.6
26.6 27.0
30
22.7 23.1
17.1 25.2
24.4
15 19.3 18.5
14.2
0
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
Source: Company, Angel Research, SIAM
OPM up on higher operating leverage: During 1QFY2011, ALL witnessed 881bp
yoy increase in EBITDA margin mainly on the back of increased improved
operating leverage. Staff cost and other expenditure, as a percentage of sales,
improved by 717bp and 289bp yoy, respectively. Raw material cost however,
increased by 12bp yoy and accounted for 73.8% (72.6%) of sales in 1QFY2011.
The company hiked prices to the extent of Rs14,500/vehicle (1.5%) in April 2010,
which helped to reduce the raw material cost pressures to a certain extent. Another
price hike action of ~Rs23,500/vehicle (2.5%) was taken by the company towards
June end 2010, which should further reduce the pressure going forward.
July 28 2010 3

4. Ashok Leyland |1QFY2011 Result Update
Exhibit 6: EBITDA margins up 881bp Exhibit 7: Substantial net profit growth on low base
(%) (Rs cr) (%)
100 240 7.6 8
73.2 73.9 200 5.8 5.2
72.6 70.2 71.4 5.6
75 6
160
50 120 4
80
25 10.5 11.4 12.9 2
10.0
0.9
1.2 40
0
0 0
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
EBITDA Margin Raw Material Cost/Sales Net Profit (LHS) Net Profit Margin (RHS)
Source: Company, Angel Research Source: Company, Angel Research
Net profit spikes 1,480% on low base: Net profit grew by a substantial 1,480% yoy
to Rs123cr (Rs7.8cr) on a low base, robust volume growth and better operating
performance. Interest cost increased substantially by 22.6% yoy on account of
increase in loans and interest costs. Depreciation also reported 41.3% yoy increase
during the quarter largely due to the ongoing capex. Lower tax rate however,
arrested further contraction in NPM.
Conference Call - Key Highlights
HCV segment growing faster: ALL has been able to post strong volume growth
following revival in demand in the heavy commercial vehicle (HCV) segment.
HCV volumes, which picked up from 4QFY2010, witnessed good traction in
1QFY2011. The HCV segment has been growing faster compared to the other
segments.
Demand pick-up in south: Although ALL has a pan-India presence, it
commands market share of close to 45% in the south. The HCV market in the
south witnessed an uptick during 1QFY2011 and management expects
demand to remain robust for the rest of the year. Management expects
stronger growth in the southern market to help the company increase its
overall market share.
Volume guidance: Management has revised its volume target for FY2011 to
~89,000 units from the earlier forecast of ~85,000 units. This includes
~80,000 of M&HCVs, 1,000 LCVs and about 8,000 units for exports. ALL has
a balance order book of ~1,000 units under the JNNURM and for another
1,000 units.
Increase in market share: ALL recorded ~200bp improvement in market share
in the northern and western regions during 1QFY2011. The company
recorded overall market share of 27% (26.5% in 4QFY10). The regional
market share in the HCV segment, as on 1QFY2011 was as follows: North
26%, South 45%, West 17% and East 10%.
Pantnagar plant update: Only 800 units were manufactured at the
Uttaranchal facility during 1QFY2011. However, the company expects to
manufacture 17,000-18,000 vehicles over the next nine months. The
July 28 2010 4

5. Ashok Leyland |1QFY2011 Result Update
company plans to ramp up production to optimal levels of 4,000 units/month
by March 2011.
Exports: Exports grew by ~100% during the quarter backed by demand from
Sri Lanka and Bangladesh. ALL expects strong demand growth from the
Middle East (Dubai and Saudi Arabia).
The company’s debt levels is pegged at ~Rs2,600cr and cash balance is at
~Rs150-200cr. ALL raised Rs300cr during 1QFY2011.
ALL plans to incur Rs700cr and Rs750cr capex during FY2011 and FY2012,
respectively. The spend will be towards manufacturing the new range of
Neptune engines, next generation cabs and on the joint venture with Nissan
Motor Co for LCV’s.
Management has indicated that the applicable tax rate is MAT. However, the
effective tax rate would be lower than MAT on account of the tax credits
available on research and development spends.
Exhibit 8: ALL-M&HCV passenger volume and market share Exhibit 9: ALL-M&HCV goods volume and market share
(Units) Market share (RHS) M&HCV passenger (%) (Units) Market share (RHS) M&HCV goods (%)
yoy growth (RHS) yoy growth (RHS)
8,000 210 24,000 300
6,000 140 18,000 200
4,000 70 12,000 100
2,000 0 6,000 0
0 (70) 0 (100)
1QFY07
2QFY07
3QFY07
4QFY07
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
1QFY07
2QFY07
3QFY07
4QFY07
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: : Company, SIAM, Angel Research Source: Company, SIAM, Angel Research
July 28 2010 5

6. Ashok Leyland |1QFY2011 Result Update
Investment Arguments
Strong volume growth traction: The strong rebound in CV demand in FY2010,
on account of the revival in the Indian economy aided ALL in clocking higher
growth on a low base. As a result, ALL recorded a healthy 18% yoy growth in
FY2010. With CV demand in its mid cycle, we believe in FY2011 industry
would record double-digit volume growth. We estimate ALL to clock a volume
CAGR of around 21.3% over FY2010-12E.
Pantnagar plant help mitigate margin pressure: Management has indicated
the new tax-free unit at Pantnagar would be relatively more profitable, with
profitability estimated at around 25% higher than the existing plants. Thus,
EBITDA margins are expected to hold up at around 10.5% in FY2012E. The
company expects to manufacture more than 18,000 vehicles from the
Uttaranchal plant in FY2011 and further ramp it to ~45,000 vehicles in
FY2012. Total expenditure at the Uttaranchal plant is expected to be close to
Rs1,100cr, out of which Rs1,000cr has already been spent. This capex would
result in additional capacity of close to 50,000 vehicles per annum. Tax
benefit availed at the Pantnagar plant would help the company in saving
~Rs35,000/vehicle on the net realisation front.
JV contribution yet to crystallise: ALL has entered into an initial agreement to
form a JV with Nissan Motor Company for the development, manufacture and
distribution of LCV products. As ALL has a negligible presence in the LCV
space, this partnership would be positive for it in the long run. ALL expects
vehicle roll outs to start from the JV from 2011. Its JV with John Deere is
expected to start production from October 2010.
July 28 2010 6

7. Ashok Leyland |1QFY2011 Result Update
Outlook and Valuation
Overall outlook for the domestic CV industry is positive with volumes expected
to grow 16-18% yoy in FY2011. A majority of the factors that drive freight
demand and consequently M&HCV demand have turned positive and the CV
manufacturers are expected to benefit from the economic recovery going
forward.
We have revised our estimates upwards by ~3-4% to account for the lower tax
rate.
Exhibit 10: Change in estimates
Y/E March Earlier Estimates Revised Estimates % chg
FY11E FY12E FY11E FY12E FY11E FY12E
Net Sales (Rs cr) 9,790 11,382 9,793 11,389 - 0.1
OPM (%) 10.4 10.5 10.4 10.5 - -
EPS (Rs) 4.2 5.0 4.3 5.2 2.6 3.8
Source: Company, Angel Research
At the CMP of Rs73, the stock is trading at 16.8x FY2011E and 14.0x
FY2012E EPS. We recommend a Neutral on the stock owing to the recent run
up in the stock price. Our fair value for ALL works out to Rs73, at which level
the stock would trade at 14x FY2012E earnings. We prefer Tata Motor in the
CV space as it is trading at reasonable discount in relative terms.
Exhibit 11: Key Assumptions
FY07 FY08 FY09 FY10 FY11E FY12E
M&HCV Passenger (units) 15,445 22,262 19,745 18,480 21,252 23,377
M&HCV Goods (units) 67,296 60,224 33,349 44,348 59,870 65,857
LCV (units) 289 825 1,350 1,247 1,621 5,000
Total Volume (units) 83,030 83,311 54,444 64,075 82,743 94,234
% yoy chg 34.7 0.3 (34.6) 17.7 29.1 13.9
Domestic (units) 77,005 76,025 47,632 58,141 74,469 84,719
Exports (units) 6,025 7,286 6,812 5,934 8,274 9,515
Segment-wise Revenue break-up (Rs cr)
Vehicle 7,776 8,102 5,520 6,746 9,321 11,040
Engines 153 235 442 369 445 519
Spare Parts 547 791 800 885 974 1,071
Services and Others - 13 23 36 22 25
Total Revenue (Rs cr) 8,475 9,142 6,784 8,035 10,762 12,654
Source: Company, Angel Research
Exhibit 12: Angel v/s consensus forecast
Angel estimates Consensus Variation (%)
FY11E FY12E FY11E FY12E FY11E FY12E
Top Line (Rs cr) 9,793 11,389 9,294 10,988 5.4 3.6
EPS (Rs) 4.3 5.2 4.0 5.2 7.1 0.7
Source: Angel Research, Bloomberg
July 28 2010 7

8. Ashok Leyland |1QFY2011 Result Update
Exhibit 13: One-year forward P/E band Exhibit 14: One-year forward P/E chart
(Rs) Share Price (Rs) 6x 9x 12x 15x One-yr forward P/E Five-yr average P/E
80 40
60 30
40 20
20 10
0 0
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Oct-03
Oct-04
Nov-05
Nov-06
Dec-07
Dec-08
Jun-08
Jun-09
Jan-10
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
May-06
May-07
Jul-10
Apr-03
Apr-04
Apr-05
Source: Company, Angel Research, Bloomberg Source: Company, Angel Research, Bloomberg
Exhibit 15: One-year forward EV/EBITDA band Exhibit 16: One-year forward EV/EBITDA chart
(Rs cr) EV (Rs cr) 4x 6x 8x 10x One-yr forward EV/EBITDA Five-yr average EV/EBITDA
12,000 20
9,000 15
6,000 10
3,000 5
0 0
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jul-10
May-06
May-07
Dec-07
Dec-08
Jun-08
Jun-09
Jan-10
Apr-03
Apr-04
Apr-05
Oct-03
Oct-04
Nov-05
Nov-06
Source: Company, Angel Research, Bloomberg Source: Company, Angel Research, Bloomberg
Exhibit 17: Automobile - Recommendation summary
CMP Tgt Price Upside P/E (x) EV/EBITDA (x) RoE (%) FY10-12E EPS
Company Reco.
(Rs) (Rs) (%) FY11E FY12E FY11E FY12E FY11E FY12E CAGR (%)
Ashok Leyland Neutral 73 - - 16.8 14.0 11.8 10.2 15.1 16.7 34.1
Bajaj Auto* Neutral 2,701 - - 17.4 15.6 11.3 9.7 61.3 47.9 21.1
Hero Honda Accumulate 1,855 2,102 13.3 15.4 14.1 11.2 9.9 56.1 49.7 8.4
Maruti Suzuki Accumulate 1,203 1,338 11.3 15.1 12.9 8.8 7.0 17.9 15.9 3.7
M&M Accumulate 644 704 9.3 16.3 14.2 11.2 9.8 25.1 23.9 13.9
Tata Motors Accumulate 852 907 6.5 14.6 11.8 7.5 6.7 25.0 26.3 26.5
TVS Motor* Neutral 133 - - 18.4 13.5 9.5 8.1 18.8 22.9 64.0
Source: Company, Angel Research; Note: * The numbers are not adjusted for bonus
July 28 2010 8

9. Ashok Leyland |1QFY2011 Result Update
Profit & Loss Statement
Y/E March (Rs cr) FY07 FY08 FY09 FY10 FY11E FY12E
Gross Sales 8,475 9,142 6,784 8,035 10,762 12,654
Less: Excise duty 1,155.1 1,206.3 685.6 627.9 968.5 1,265.4
Net Sales 7,320 7,935 6,098 7,407 9,793 11,389
Total operating income 7,320 7,935 6,098 7,407 9,793 11,389
% chg 37.3 8.4 (23.1) 21.5 32.2 16.3
Total Expenditure 6,648 7,128 5,642 6,652 8,779 10,199
Net Raw Materials 5,445 5,764 4,480 5,212 7,100 8,246
Other Mfg costs 138.2 160.6 131.9 134.8 220.3 256.2
Personnel 478.7 614.0 563.1 671.6 734.5 820.0
Other 586.4 589.7 467.4 633.9 724.7 876.9
EBITDA 672.4 807.6 456.0 755.2 1,013.6 1,190
% chg 26.5 20.1 (43.5) 65.6 34.2 17.4
(% of Net Sales) 9.2 10.2 7.5 10.2 10.4 10.5
Depreciation& Amortisation 150.6 177.4 178.4 204.1 269.3 307.2
EBIT 521.8 630.3 277.5 551.1 744.3 883
% chg 28.6 20.8 (56.0) 98.6 35.0 18.6
(% of Net Sales) 7.1 7.9 4.6 7.4 7.6 7.8
Interest & other Charges 28.8 76.3 160.3 101.9 124.0 136.4
Other Income 111.6 84.2 91.2 95.5 99.1 105.1
(% of PBT) 18.9 13.6 46.3 18.9 13.8 12.3
Recurring PBT 604.5 638.2 208.5 544.8 719.3 852
% chg 33.7 5.6 (67.3) 161.3 32.0 18.4
Extraordinary Expense/(Inc.) 15.5 18.6 11.2 40.1 - -
PBT 589.0 619.7 197.2 504.7 719.3 852
Tax 163.2 168.8 18.5 121.1 143.9 161.8
(% of PBT) 27.7 27.2 9.4 24.0 20.0 19.0
PAT (reported) 425.8 450.8 178.8 383.6 575.5 689.8
ADJ. PAT 441.3 469.4 190.0 423.7 575.5 689.8
% chg 34.8 6.4 (59.5) 123.0 35.8 19.9
(% of Net Sales) 6.0 5.9 3.1 5.7 5.9 6.1
Basic EPS (Rs) 3.2 3.4 1.3 2.9 4.3 5.2
Fully Diluted EPS (Rs) 3.2 3.4 1.3 2.9 4.3 5.2
% chg 29.9 5.4 (60.3) 114.6 50.0 19.9
July 28 2010 9

10. Ashok Leyland |1QFY2011 Result Update
Balance Sheet
Y/E March (Rs cr) FY07 FY08 FY09 FY10 FY11E FY12E
SOURCES OF FUNDS
Equity Share Capital 132.4 133.0 133.0 133.0 133.0 133.0
Preference Capital - - - - - -
Reserves & Surplus 1,762 2,016 3,341 3,536 3,818 4,168
Shareholders’ Funds 1,895 2,149 3,474 3,669 3,951 4,301
Total Loans 640.4 887.5 1,962 2,280 2,480 2,480
Deferred Tax Liability 196.9 253.8 263.4 384.5 398.9 407.4
Total Liabilities 2,732 3,290 5,699 6,334 6,831 7,189
APPLICATION OF FUNDS
Gross Block 2,620 2,942 4,953 6,019 6,995 7,493
Less: Acc. Depreciation 1,313 1,417 1,554 1,769 2,038 2,346
Net Block 1,307 1,526 3,399 4,250 4,957 5,147
Capital Work-in-Progress 237.5 529.2 998.3 561.5 349.7 224.8
Goodwill - - - - - -
Investments 221.1 609.9 263.6 326.2 341.5 359.5
Current Assets 2,698 2,875 3,166 4,152 4,243 4,768
Cash 434.9 451.4 88.1 518.9 182.0 46.3
Loans & Advances 669.6 824.1 789.5 972.9 1,273.1 1,480.6
Other 1,593 1,600 2,288 2,660 2,788 3,241
Current liabilities 1,756 2,272 2,137 2,961 3,060 3,310
Net Current Assets 941.9 603.3 1,029 1,191 1,183 1,458
Mis. Exp. not written off 24.4 22.3 9.7 5.2 - -
Total Assets 2,732 3,290 5,699 6,334 6,831 7,189
July 28 2010 10

11. Ashok Leyland |1QFY2011 Result Update
Cash Flow Statement
Y/E March (Rs cr) FY07 FY08 FY09 FY10 FY11E FY12E
Profit before tax 589.0 619.7 197.2 504.7 719.3 851.6
Depreciation 150.6 177.4 178.4 204.1 269.3 307.2
Change in Working Capital (150.1) (669.9) 155.4 (296.9) (251.5) (46.1)
Less: Other income (73.7) (1,107) 1,038 (799) 29.6 349.6
Direct taxes paid 163.2 168.8 18.5 121.1 143.9 161.8
Cash Flow from Operations 500.0 1,066 (525.6) 1,090 563.7 601.3
(Inc.)/Dec. in Fixed Assets (577.8) (614.0) (2,480) (628.5) (764.6) (372.7)
(Inc.)/Dec. in Investments 147.1 (388.8) 346.3 (62.6) (15.4) (17.9)
(Inc.)/Dec. in loans and adv. (253.6) 189.3 0.7 82.1 201.6 207.5
Other income 111.6 84.2 91.2 95.5 99.1 105.1
Cash Flow from Investing (572.7) (729.3) (2,042) (514) (479.3) (78.1)
Issue of Equity 317.1 0.6 - - - -
Inc./(Dec.) in loans (51.5) 247.1 1,074.5 318.5 200.0 -
Dividend Paid (Incl. Tax) 182.2 226.4 233.7 155.6 232.7 249.0
Others (542.2) (794.1) 895.7 (619.9) (854.0) (908.0)
Cash Flow from Financing (94.4) (320.0) 2,204 (145.8) (421.3) (658.9)
Inc./(Dec.) in Cash (167.2) 16.4 (363.3) 430.8 (336.9) (135.7)
Opening Cash balance 602.1 434.9 451.4 88.1 518.9 182.0
Closing Cash balance 434.9 451.4 88.1 518.9 182.0 46.3
July 28 2010 11

12. Ashok Leyland |1QFY2011 Result Update
Key Ratios
Y/E March FY07 FY08 FY09 FY10 FY11E FY12E
Valuation Ratio (x)
P/E (on FDEPS) 22.5 21.4 53.9 25.1 16.8 14.0
P/CEPS 16.2 14.9 26.2 16.4 11.4 9.7
P/BV 5.1 4.5 4.6 4.1 3.7 3.2
Dividend yield (%) 2.1 2.1 1.4 2.1 2.2 2.8
EV/Sales 1.2 1.1 1.7 1.4 1.1 1.0
EV/EBITDA 14.7 12.5 25.3 15.1 11.8 10.1
EV / Total Assets 3.6 3.1 2.0 1.8 1.7 1.7
Per Share Data (Rs)
EPS (Basic) 3.2 3.4 1.3 2.9 4.3 5.2
EPS (fully diluted) 3.2 3.4 1.3 2.9 4.3 5.2
Cash EPS 4.5 4.9 2.8 4.4 6.4 7.5
DPS 1.5 1.5 1.0 1.5 1.6 2.0
Book Value 14.1 16.0 15.9 17.6 19.7 22.3
Dupont Analysis
EBIT margin 7.1 7.9 4.6 7.4 7.6 7.8
Tax retention ratio 0.7 0.7 0.9 0.8 0.8 0.8
Asset turnover (x) 3.7 3.1 1.7 1.7 2.0 2.0
RoIC (Post-tax) 19.2 18.0 7.1 9.6 12.2 12.9
Cost of Debt (Post Tax) 3.1 7.3 10.2 3.6 4.2 4.5
Leverage (x) - - 0.3 0.4 0.4 0.5
Operating RoE 19.2 18.0 6.3 12.1 15.7 17.0
Returns (%)
RoCE (Pre-tax) 20.8 20.9 6.2 9.2 11.3 12.6
Angel RoIC (Pre-tax) 22.9 22.4 6.5 12.3 14.0 15.2
RoE 26.7 23.2 6.8 11.9 15.1 16.7
Turnover ratios (x)
Asset Turnover (Gross Block) 3.1 2.9 1.5 1.4 1.5 1.6
Inventory / Sales (days) 49.2 52.8 76.4 73.1 64.2 62.7
Receivables (days) 23.6 20.7 39.9 48.8 36.5 36.5
Payables (days) 69.8 82.3 113.6 109.9 97.4 87.1
WC cycle (ex-cash) (days) 18.1 15.2 32.7 39.7 31.2 38.7
Solvency ratios (x)
Net debt to equity (0.0) (0.1) 0.5 0.4 0.5 0.5
Net debt to EBITDA (0.0) (0.2) 3.5 1.9 1.9 1.7
Interest Coverage (EBIT/Interest) 18.1 8.3 1.7 5.4 6.0 6.5
July 28 2010 12

13. Ashok Leyland |1QFY2011 Result Update
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement Ashok Leyland
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)
July 28 2010 13