Ashok Leyland - Q4FY20 First Cut - ICICI Securities

(CMP: Rs. 54; MCap: Rs. 15,675 crore)

Ashok Leyland reported healthy operational performance in Q4FY20 amidst challenging volume scenario and was ahead of our estimates. EBITDA margins for the quarter came in at 4.8% vs. our estimate of 2.7% primarily tracking robust gross margin expansion, the benefits of which were partially limited by higher overhead costs. The company however still posted loss at the PAT level courtesy impairment charge on equity investments.

Q4FY20 Earnings Summary

- Revenues came in at Rs. 3,838 crore, down 56.6% YoY (vs. I Direct estimate of Rs. 3,429 crore) courtesy higher than anticipated ASP's (Rs. 15.1 lakh/unit vs. expectation of Rs. 13.4 lakh/unit). Total CV sales volumes in Q4FY20 were at 25,490 units (down 57% YoY) comprising M&HCV sales volume of 16,939 units (down 62% YoY) and LCV sales volume of 8,551 units (down 45% YoY). LCV to MHCV mix in Q4FY20 was at 34:66 vs. 42:58 in the previous quarter. Net sales for the full year stood at Rs. 17,468 crore, down 40% YoY

- Reported EBITDA was at Rs. 183 crore, down 81.4% YoY with consequent EBITDA margins at 4.8% (down 84 bps QoQ) as against our estimates of Rs. 93 crore, 2.7%. Gross margins expanded 240 bps QoQ, with other expenses falling 60 bps. Employee costs, however, rose 390 bps sequentially and negated the gains. Margins for FY20 came in at 6.7%, a slide of 410 bps YoY

- Despite better operational performance, company reported loss at the PAT level to the tune of Rs. 57 crore (I-direct loss estimate of Rs. 68 crore), primarily tracking impairment charges on equity investments and was supported by high other income as well as lower than anticipated tax outgo. Full year FY20 reported PAT stood at Rs. 240 crore, down 88% YoY

- On the cash flow front, the company posted healthy CFO to the tune of Rs. 941 crore in FY20, the FCF generation, however, remained elusive due to capex incurred on account of BS-VI transition

We will be coming out with a detailed report post the scheduled conference call.

Shares of ASHOK LEYLAND LTD. was last trading in BSE at Rs.53.55 as compared to the previous close of Rs. 54.1. The total number of shares traded during the day was 1946617 in over 4499 trades.

The stock hit an intraday high of Rs. 54.75 and intraday low of 52.5. The net turnover during the day was Rs. 105035322.

Source : Equity Bulls

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