(Reuters) – India’s Ashok Leyland reported a bigger-than-expected third-quarter profit on Wednesday as a rise in exports more than offset sluggish domestic demand for its trucks and buses.
Shares of the Hinduja Group flagship company rose 4.4% after results.
Its standalone profit rose 31.3% to 7.63 billion rupees ($87.83 million) in the three months ended December 31, beating analysts’ average estimate of 6.66 billion rupees, according to data compiled by LSEG.
Revenue from operations rose 2.2% to 94.79 billion rupees.
Cost of materials and services, which account for most of the total expenses, fell 2.9%.
For further earnings highlights, click (Full Story)
KEY CONTEXT
Ashok Leyland’s exports rose by a third in the quarter. Total sales, however, fell 2.2%, hurt by sluggish capex spending in the country, analysts said.
“Sales in international markets are showing strong growth, and we expect this momentum to accelerate with the launch of new products,” Dheeraj Hinduja, executive chairman of the company, said in a statement.
India’s overall commercial vehicles sales rose 1.2% in the quarter, helped by a rise in the demand for light commercial vehicles, which forms only around 34% of Ashok Leyland’s total sales.
Analysts also said most commodity prices remained stable in the quarter and prices of steel, one of the key raw materials used in the industry, remained soft.
Bigger rival Mahindra & Mahindra reported a 19% rise in quarterly profit last week, while Tata Motors’ third-quarter profit came in below market expectations.
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 17.79 19.61 NULL 6.71 11.52 Buy 30 0.81 2.20
Mahindra and 26.88 24.43 NULL 14.52 15.32 Buy 30 0.88 0.68
Mahindra
Tata Motors 8.98 4.67 0.59 4.38 4.18 Buy 29 0.79 0.44
Eicher Motors 27.35 25.19 7.24 13.46 12.68 Hold 27 0.93 1.03
* 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
OCTOBER-DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 86.8825 Indian rupees
(Reporting by Meenakshi Maidas in Bengaluru; Editing by Sumana Nandy and Saumyadeb Chakrabarty)
