Ashok Leyland Q4 Review - Tighter Cost Control Aids Margin: ICICI Securities

The logo on the front grill of an Ashok Leyland Ltd. goods-carrier truck in Mumbai. (Photographer: Abhijit Bhatlekar/Bloomberg News)  

Ashok Leyland Q4 Review - Tighter Cost Control Aids Margin: 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 Q4 FY21 operating performance beat consensus estimates as Ebitda margin came in at 7.6%.

This was driven by driven tighter control on fixed costs, strong operating leverage even as gross margins shrunk (~248 basis points QoQ to 23.1%) due to high input cost pressures.

Key industry monitorables:

  1. Pace of recovery of economic activity and capex trends in key segments (e.g. infrastructure).

  2. Used vehicle demand/pricing trends.

  3. Trends in freight rates.

We estimate the company’s volumes to rebound at ~29% compound annual growth rate FY21-FY23E driven by medium and heavy commercial vehicle revival coupled with market share gains in light commercial vehicle segments.

Click on the attachment to read the full report:

ICICI Securities Ashok Leyland Q4FY21 Results Update.pdf

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