Ashok Leyland Q3 Review - Margin Recovery Falls Short Of Expectations: ICICI Securities
The logo on the front grill of an Ashok Leyland Ltd. goods-carrier truck, in Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)  

Ashok Leyland Q3 Review - Margin Recovery Falls Short Of Expectations: ICICI Securities

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Ashok Leyland Ltd.’s operating performance in Q3 FY21 was below consensus estimates as Ebitda margin came in at 5.3%.

Gross margins eroded approximately 321 basis points QoQ to 25.6% due to high input cost pressures.

Key medium-term industry monitorables -

  1. economic activity and growth trends in infrastructure-led demand;
  2. used vehicle demand/pricing trends; and
  3. contours of scrappage policy.

We estimate volume rebound at ~35% compound annual growth rate FY21E-FY23E, which we reckon will raise asset efficiencies, margins for the company leading to healthy free cash flow generation (~Rs 30 billion cumulative FCF in FY22E/23E) assuming subdued capex intensity.

Click on the attachment to read the full report:

ICICI Securities Ashok Leyland Q3FY21 Results Update.pdf

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