(Reuters) -India’s Ashok Leyland reported a bigger-than-expected first-quarter profit on Thursday as margins improved.
The standalone profit for the Hinduja Group’s flagship company rose 13% to 5.94 billion rupees ($67.86 million) in the three months ended June 30, beating analysts’ average estimate of 5.70 billion rupees, according to data compiled by LSEG.
Revenue from operations rose a marginal 1.5% to 87.25 billion rupees, in line with analysts’ average estimate of 87.26 billion rupees. The company also logged a 12% jump in the sales of its higher-margin buses, part of its medium and heavy commercial vehicle (M&HCV) segment.
Shares rose as much as 3.6% after results, before trimming some gains to trade 1.4% higher.
For further earnings highlights, click
KEY CONTEXT –
Despite a marginal rise in steel prices, a favourable net pricing, which is the final amount a customer pays for a product, and internal cost control measures boosted Ashok Leyland’s margins, according to analysts, which rose to 6.81% from 6.11% a year ago.
Demand for M&HCV buses also ticked up in the quarter due to increased orders for public transport buses, replacement of old fleets, and government’s push to enhance urban public transport systems.
Rivals Mahindra & Mahindra and Eicher Motors beat quarterly profit estimates on strong demand for SUV and motorcycles, respectively, while Tata Motors’ profit plunged as tariffs, slow sales hurt.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBI Price/ Revenue Profit Mean No. of Stock to Div
TDA Sales growth (%) growth (%) rating* analyst price yield
s target** (%)
Ashok Leyland 19.38 20.15 1.63 7.64 9.27 Buy 29 0.90 2.60
Mahindra and 26.33 23.52 NULL 14.57 17.05 Buy 31 0.89 0.79
Mahindra
Tata Motors 8.67 4.59 4.61 4.30 -15.23 Hold 28 0.91 0.92
Eicher Motors 30.02 27.68 6.86 11.98 9.28 Hold 29 1.00 1.23
* 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
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.5388 Indian rupees
(Reporting by Anuran Sadhu in Bengaluru; Editing by Janane Venkatraman)
