Key points
Ashok Leyland's total vehicle sales for December 2008 were below our expectations. The sales of the company plunged during the month amidst weaker demand and financing constraints. The total sales (including exports) declined by 63% to 2,321 units from 6,340 units in the same month a year ago. On a month-on-month basis, the total sales grew by a meagre 1%, taking the year-till-date (YTD) sales volume down by 22%.
Sales in the medium duty vehicle (MDV) passenger segment slumped by 38% on a yearly basis to 1,211 vehicles, with the sales of domestic passenger vehicles declining by 42% and exports dropping by 28%. However, on a monthly basis, the total MDV passenger sales surged by 18% during the month.
The MDV goods segment’s sales dropped by 76% year on year (yoy) to 1,061 vehicles. The domestic sales declined by a whopping 85% yoy to 637 vehicles. On the other hand, the exports showed an impressive growth of 119% to 424 vehicles.
On a YTD basis (April-December 2008), the total sales declined by 22% to 43,657 vehicles as against 55,998 vehicles in the same period of the last year.
We maintain a cautious outlook on the commercial vehicle industry till the real interest rates decline and the financial institutions show willingness to lend to the sector. At the current market price of Rs15, the stock quotes at 4.4x its FY2010E earnings and an enterprise value/earnings before interest, tax, depreciation and amortisation of 3.7x.
Ashok Leyland's total vehicle sales for December 2008 were below our expectations. The sales of the company plunged during the month amidst weaker demand and financing constraints. The total sales (including exports) declined by 63% to 2,321 units from 6,340 units in the same month a year ago. On a month-on-month basis, the total sales grew by a meagre 1%, taking the year-till-date (YTD) sales volume down by 22%.
Sales in the medium duty vehicle (MDV) passenger segment slumped by 38% on a yearly basis to 1,211 vehicles, with the sales of domestic passenger vehicles declining by 42% and exports dropping by 28%. However, on a monthly basis, the total MDV passenger sales surged by 18% during the month.
The MDV goods segment’s sales dropped by 76% year on year (yoy) to 1,061 vehicles. The domestic sales declined by a whopping 85% yoy to 637 vehicles. On the other hand, the exports showed an impressive growth of 119% to 424 vehicles.
On a YTD basis (April-December 2008), the total sales declined by 22% to 43,657 vehicles as against 55,998 vehicles in the same period of the last year.
We maintain a cautious outlook on the commercial vehicle industry till the real interest rates decline and the financial institutions show willingness to lend to the sector. At the current market price of Rs15, the stock quotes at 4.4x its FY2010E earnings and an enterprise value/earnings before interest, tax, depreciation and amortisation of 3.7x.
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