(Reuters) – Indian truckmaker Ashok Leyland beat estimates for second-quarter profit on Friday, as lower costs more than offset the impact of tepid demand for its trucks and buses.
The Hinduja Group company’s profit rose 37.3% to 7.7 billion rupees ($91.3 million) for the three-month period ended Sept. 30, beating analysts’ estimate of 5.66 billion rupees, as per data compiled by LSEG.
Revenue from operations fell 9% to 87.69 billion rupees.
The company’s cost of materials and services consumed, which makes up for a majority of its total expenses, fell 17.4%. Total expenses were down by 9.2% for the quarter.
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KEY CONTEXT
Sales of commercial vehicles (CV) in India fell 11% year-on-year in the second quarter, while Ashok Leyland’s sales slid 9.9%. Analysts attributed the drop to heavy monsoon rainfall and a lack of demand pickup after the national elections.
Prices of many key raw materials in the auto industry such as steel, lead, aluminium and copper fell in the quarter, analysts said.
CV sales in India during the quarter decreased from last year’s levels due to extended monsoon and high vehicle prices, according to industry data.
Ashok Leyland accounted a one-time gain of 1.17 billion rupees in the quarter from an investment in a subsidiary.
Larger competitor Mahindra & Mahindra on Thursday reported a surprise rise in Q2 profit on higher SUV sales, while Tata Motors will report its quarterly results later on Friday.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBI Price/ Revenue Profit Mean # of Stock to Div
TDA Sales growth (%) growth (%) rating* analyst price yield
s target** (%)
Ashok Leyland 18.18 18.68 – 6.98 13.50 Buy 31 0.84 2.29
Tata Motors 10.87 5.13 0.65 7.28 -0.03 Buy 29 0.71 0.37
Mahindra and Mahindra 27.27 24.93 – 12.38 14.16 Buy 32 0.89 0.73
Eicher Motors 27.58 24.79 6.65 11.97 13.00 Hold 27 1.03 1.05
* The mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 84.3470 Indian rupees
(Reporting by Meenakshi Maidas in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala)
