Ashok Leyland posts Rs 142cr loss in Q1; shrs hit 4-yr low
The country's second largest commercial vehicle maker's operating margins slumped to 1.1 percent in April-June and Vinod Dasari, MD, says this is one of the harshest and steepest of downturns.
July 17, 2013 / 00:09 IST
Moneycontrol Bureau
Ashok Leyland missed street estimates by a wide margin on Tuesday, reporting a first quarter net loss of Rs 142 crore, compared with a profit of Rs 67 crore in the year ago quarter. The stock plunged to a 4-year low of Rs 15.85 on NSE after the disappointing results announcement.Its April-June quarter revenue slumped 22 percent year-on-year to Rs 2,364 crore, the India's second largest commercial vehicle maker said on Tuesday.Analysts on average had expected the Chennai-based company to report a net loss of Rs 60 crore, on revenue of Rs 2,371 crore.Commercial vehicle makers in India have been hit hard as truck operators and logistics companies have postponed fleet expansions as the existing capacity itself is under-utilised due to the overall economic slowdown. While medium & heavy truck sales have seen sluggish growth for over a year now, small trucks like Ashok Leyland's Dost and Tata Motors Ace are also seeing few takers since the last 2-3 months.Ashok Leyland's EBITDA (earnings before interest, taxes, depreciation and amortization) plunged to Rs 28 crore from Rs 241 crore and margin contracted to 1.1 percent in April-June from 8 percent a year ago.Abhishek Gaoshinde, analyst at Sunidhi Securities, told moneycontrol.com that 1.1 percent margin was the biggest negative surprise from Ashok Leyland."What we are experiencing is one of the harshest and steepest of downturns," Vinod Dasari, MD, said.The company sold 14,900 units in April-June, down 25 percent year-on-year. Dost volumes declined to 6,824 units from 7,248 units.Apart from declining sales, increase in share of low-margin products like the Dost, is also hurting margins, Gaoshinde said."To effectively address the tough situation that is expected to last for this fiscal, the company has initiated concerted efforts to reduce its breakeven point. Manufacturing footprint is being rationalized to improve asset utilization. Focused efforts to reduce the debt have been accelerated and steps have been taken to reduce operational expenses," the company said.Sunidhi Securities has a "sell" rating on the stock.Ashok Leyland shares closed down 9.7 percent at Rs 15.75 on NSE.Also Read: Will increase battery prices if $ rises further, says ExideNachiket Kelkar
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