Ashok Leyland plans to raise Rs. 300cr via bond issue - Angel Broking

According to media reports, Ashok Leyland is planning to raise Rs. 300cr via dual tranche bonds. The company is likely to issue three year bonds at 9.45% and five year bonds at 9.60% according to the reports. Although there has been no information regarding the usage of the funds, we believe the company would utilize the bond proceeds towards capital expenditure.

Ashok Leyland intends to incur capital expenditure and investments worth Rs. 500cr in FY2014 after incurring Rs. 1,600cr in FY2013. We do not see a significant change in company's net debt: equity ratio (currently at 0.3x) post the issue considering that the company also intends to reduce its working capital loans by Rs. 500cr in FY2014.

At Rs. 21, the stock is trading at 9.5x FY2015E earnings. We maintain our Buy rating on the stock with a target price of Rs. 27.

Source : Equity Bulls

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