Angel Broking remained neutral rating on Ashok Leyland , in its October 30, 2009 report.
"For 2QFY2010, Ashok Leyland (ALL) reported a 15.7% yoy decline in Net Sales to Rs 1,577.7 crore, which was lower than our expectation of Rs 1,844.5 crore, owing to lower Revenue from the Engine and Spare Parts business. The Net Profit grew by 31.8% yoy to Rs 88.6 crore (Rs 67.2 crore), owing to a better operating performance, combined with better financial leverage."
"The outlook of the management on the future of the domestic Commercial Vehicle (CV) industry is extremely positive and they expect ALL to exit this fiscal with a 20% yoy volume growth. A majority of the factors that drive freight demand and, consequently, M&HCV demand have turned positive and we expect the CV manufacturers to benefit from the expected economic recovery in 2HFY2010E. On the better-than-expected operating performance, we revise our EPS estimate for ALL to Rs2.6 (Rs1.8 earlier) in FY2010E and to Rs3.3 (Rs2.5 earlier) in FY2011E. At the CMP, the stock is trading at 13.8x FY2011E EPS. We remain Neutral on the stock, as most of the positives have already been factored in the CMP."
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