2QFY2012 Result Update | Automobile

November 4, 2011

Ashok Leyland
Performance Highlights
Y/E March (` cr)
Net sales Adj. EBITDA Adj. EBITDA margin (%) Reported PAT
Source: Company, Angel Research

BUY
CMP Target Price
% chg (yoy)
14.0 8.1 (58)bp (7.8)

`28 `32
12 Months

2QFY12 2QFY11
3,095 331 10.7 154 2,714 306 11.3 167

Angel est.
3,184 299 9.4 112

% diff
(2.8) 10.6 130bp 37.5

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Automobile 7,383 1.0 41/23 715,547 1 17,563 5,284 ASOK.BO AL@IN

Ashok Leyland (AL) reported better-than-expected results for 2QFY2012, driven by higher net average realization and favorable operating leverage. We have revised our volume estimates marginally downwards and built in flat volumes for FY2012. However, we have revised our net sales estimates upwards due to the expected improvement in net average realization. We have also revised our margin estimates upwards to factor in the pricing action and softening commodity prices. We continue to maintain our Buy rating on the stock. Better-than-expected operating performance: During the quarter, AL reported 14% yoy growth in its top line to `3,095cr, driven by an 18.7% yoy increase in its average net realization. Volume performance, however, was subdued during the quarter, reporting a 3.9% yoy decline. Average net realization improved on account of price increases and higher defense kit and spare parts revenue. On a sequential basis, revenue jumped strongly by 24% as volumes increased by 22.6%. EBITDA margin came in at 10.7%, registering a decline of 58bp yoy; however, it expanded by 128bp qoq, largely due to favorable operating leverage, better-than-expected realization and lower other expenditure. Raw-material cost as a percentage of sales was more or less stable during the quarter, leading to 8.1% yoy (40.8% qoq) growth in operating profit. Net profit, however, declined by 7.8% yoy to `154cr, mainly due to higher interest and depreciation expense. Sequentially, net profit jumped substantially by 78.6%, led by better operating leverage, higher other income and lower tax-rate. Outlook and valuation: At `28, AL is trading at 10.2x its FY2013E earnings. We maintain our Buy rating on the stock with a revised target price of `32, valuing the stock at 12x its FY2013E earnings. Key financials
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 38.6 20.0 30.6 10.8

Abs. (%) Sensex Ashok Leyland

3m 13.0

1yr

3yr 65.2

(0.7) (15.9)

(29.1) 161.8

FY2010 7,407 21.5 384 101.9 10.3 1.6 19.2 3.2 10.7 9.2 1.1 11.6

FY2011 11,366 53.4 630 64.2 10.7 2.4 11.7 2.8 16.5 14.2 0.7 7.1

FY2012E 12,590 10.8 605 (3.9) 10.2 2.3 12.2 2.6 14.8 12.9 0.7 7.0

FY2013E 14,507 15.2 726 19.9 10.2 2.7 10.2 2.2 16.5 14.2 0.6 6.1

Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

Ashok Leyland | 2QFY2012 Result Update

Exhibit 1: Quarterly performance

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Purchase of traded goods (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT PATM Equity capital (cr) EPS (`)
Source: Company, Angel Research

2QFY12 3,095 2,183 70.6 252 8.1 92 3.0 236 7.6 2,763 331 10.7 63 86 10 193 0 193 6.2 39 20.1 154 5.0 266 0.6

2QFY11 2,714 1,918 70.7 211 7.8 79 2.9 199 7.3 2,408 306 11.3 39 64 5 208 0 208 7.6 40 19.5 167 6.2 266 0.6

yoy chg (%) 14.0 13.8 18.9 17.5 18.5 14.8 8.1 58.9 34.1 114.5 (7.1) (7.1) (4.2) (7.8)

1QFY12 2,496 1,723 69.0 250 10.0 75 3.0 213 8.5 2,260 235 9.4 53 85 4 101 (9) 111 4.4 24 22.1 86 3.5 266

qoq chg (%) 24.0 26.7 0.7 23.1 11.1 22.3 40.8 17.5 1.5 150.8 90.4 (100.0) 74.2 58.4 78.6

1HFY12 5,590 3,906 69.9 501 9.0 168 3.0 449 8.0 5,024 566 10.1 116 171 14 294 (9) 304 5.4 63 20.8 240 4.3 266

1HFY11 5,062 3,583 70.8 414 8.2 148 2.9 375 7.4 4,520 542 10.7 71 126 10 355 0 355 7.0 65 18.3 290 5.7 266 1.1

chg (%) 10.4 9.0 21.1 13.2 19.7 11.1 4.5 63.3 35.9 51.3 (17.0) (14.4) (2.5) (17.0)

(7.8)

0.3

78.6

0.9

(17.0)

Exhibit 2: Volume performance

(units) M&HCV passenger M&HCV goods LCV Total volume Exports (inc. above )
Source: Company, Angel Research

2QFY12 6,125 17,225 278 23,628 3,230

2QFY11 6,504 17,925 160 24,589 2,350

yoy chg (5.8) (3.9) 73.8 (3.9) 37.4

1QFY12 5,328 13,755 194 19,277 2,539

qoq chg 15.0 25.2 43.3 22.6 27.2

1HFY12 11,453 30,980 472 42,905 5,769

1HFY11 11,592 33,963 434 45,989 4,290

% chg (1.2) (8.8) 8.8 (6.7) 34.5

Top-line growth led by growth in average net realization: AL reported 14% yoy growth in its top line to `3,095cr, driven by an 18.7% yoy increase in average net realization. Volume performance, however, was subdued during the quarter, reporting a 3.9% yoy decline. Average net realization improved to `130,970 on account of price increases and higher defense kit and spare parts revenue. Sequentially, revenue jumped strongly by 24%, as volumes increased by 22.6%. The engine business posted volume of ~3,373 units in 2QFY2012 compared to ~3,432 units in 2QFY2011. The defense business reported volume of ~1,000 sets during the quarter.

November 4, 2011

Ashok Leyland | 2QFY2012 Result Update

Exhibit 3: Volumes down 3.9% yoy

(units) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
(16.9) 101.0 138.9

Exhibit 4: Net average realization trend

yoy chg (%) (%) 200 150 100 (`) 135,000 130,000 125,000 120,000 115,000
14.3 15.0 (9.9) (3.9) 1.5 1.0 (7.5) 0.0 7.2 13.3

Total volumes
178.2

Net average realisation

yoy chg (%)

18.0 18.7

(%) 25 20 15 10 5 0 (5) (10) (15)

72.0

50 0 (50)

110,000 105,000 100,000 95,000

(10.1)

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12
45.0

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 5: Net sales up 14% yoy

(`cr) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Net sales
157.3 141.3

Exhibit 6: Domestic market share trend

yoy chg (%) (%) 180 160 140 120 100 80 60 40 20 14.0 0 (20) (40) (%) 60 50 40 30 20 10 0
19.3 18.5 22.7 23.1 39.0 43.0 37.9 26.6 35.7 27.0 25.3 27.6 20.5 24.4 24.9 15.6 24.6 19.2 27.1 41.4

M&HCV passenger

M&HCV goods
50.8

Total M&HCV

2QFY12
39.9 40.2 22.2 23.7 21.1

81.6

72.0 30.3 22.5

(15.7)

6.3

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

2QFY12

Source: Company, SIAM, Angel Research

Operating margin expands on favorable operating leverage: ALs EBITDA margin for the quarter came in at 10.7%, registering a decline of 58bp yoy; however, it was 130bp ahead of our estimates. Sequentially, operating margin expanded by 128bp from 9.4%, largely due to favorable operating leverage, better-thanexpected realization and lower other expenditure. Raw-material cost as a percentage of sales was more or less stable on a yoy basis. As a result, the companys operating profit grew by 8.1% yoy (40.8% qoq) during the quarter. Staff cost witnessed an increase of 18.9% yoy, as the company added around 2,000 employees. Other expenditure also grew by 18.5% yoy because of higher advertisement expense (`5cr-6cr), one-time annual maintenance expenditure of `8cr and as production at Pantnagar continues to ramp up.

November 4, 2011

2QFY12

Ashok Leyland | 2QFY2012 Result Update

Exhibit 7: EBITDA margin rises to 10.7%

(%) 80 70 60 50 40 30 20 10 0
10.5 11.5 12.9 10.0 11.3 7.5 13.3 9.4 10.7 70.2 71.3 73.2 73.9 73.6 73.2 72.1 72.1 73.5

Exhibit 8: Net profit increases by 78.6% qoq

(` cr) 350 300 250 200 150 100 50 0
5.6 5.8 5.2 1.9

EBITDA margin

Raw material cost/sales

Net profit
7.6 6.2

Net profit margin

7.8

(%) 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

5.0 3.5

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

2QFY12

Source: Company, Angel Research

Net profit beats estimates due to operating margin expansion and high other income: Net profit for 2QFY2012 stood at `154cr, beating our estimates by 37.5%, led by expansion in operating margin and a significant increase in other income (`10cr vs. `5cr in 2QFY2011). Net profit, however, declined by 7.8% yoy largely due to higher interest (high working capital cost) and depreciation (addition to gross block) expense. Sequentially, net profit grew substantially by 78.6% on account of better operating leverage, higher other income and lower tax rate.

November 4, 2011

2QFY12

Ashok Leyland | 2QFY2012 Result Update

Conference call Key highlights

According to management, the share of South India in the commercial vehicle industry has declined to 23% from 24% earlier. The multi-axle vehicle industry in the southern region has witnessed a drop of 32-33% in 1HFY2012. Demand in the southern region has been impacted due to elections and Telangana issue. Demand for tractor trailers has also witnessed a decline of 20% in 1HFY2012 in western India. However, the higher-tonnage tipper industry has seen strong ~50% yoy growth due to mining and construction activity. Management has indicated that freight rates in the southern and eastern regions have dropped in the past couple of months, whereas the northern and western regions are witnessing a strong freight environment. Management has guided for modest industry volume growth of 5-6% in FY2012. However, according to management, the companys volumes are expected to surpass 100,000 units in FY2012, with exports likely to report sales of ~13,000 units. AL expects to maintain its market share at ~25% in FY2012 as it expects to increase penetration in the northern and eastern markets. To achieve this, the company is increasing its dealerships in northern and eastern India and its service stations across the country along with offering fully built vehicles. For 2QFY2012, production at Pantnagar increased to ~7,000 units from ~5,900 units in 1QFY2012. AL expects to produce ~20,000 units from this plant in 2HFY2012. The company lost ~20 days of production at Pantnagar in October 2011 due to civil unrest in the region and supply constraints related to fuel injection pumps from Bosch. Engine business volumes continued to be affected as the company restricted supplies to the telecom sector. The company sold ~3,373 engines in 2QFY2012 and increased its product prices by ~4% in June 2011. Around 1,500 defense kits were supplied during 1HFY2012. AL expects to supply 1,200 kits, in 2HFY2012. The spares business posted ~`370cr in sales in 1HFY2012. AL has taken an average price increase of ~1% (`8,000-12,000 across models) from November 2011. According to management, pricing action coupled with softening raw-material prices will likely boost the companys EBITDA margin in 2HFY2012. Management expects joint ventures (JV) to turn EBITDA positive over the next two-three years. Sales of U-truck volumes stood at ~2,000 units in 1HFY2012. Sales in 2HFY2012 are expected to be ~6,000 units. John Deere JV is expected to launch backhoe loaders in November 2011. As per the Nissan JV agreement, vehicles (currently Dost) sold in Tamil Nadu are sold under the JV to avail VAT benefits, whereas sales outside Tamil Nadu are booked under AL. The JV sold ~210 units of Dost in October 2011. The target for 2HFY2012 has been set at ~12,000 units.

November 4, 2011

Ashok Leyland | 2QFY2012 Result Update

Investment arguments
Demand scenario to improve with easing of interest rates: M&HCV demand has witnessed a slowdown in recent times due to high interest rates and slowdown in industrial activity; however, we believe M&HCV demand is near its trough. With interest rates expected to cool down from CY2012, we expect pick-up in industrial activity, leading to a rebound in M&HCV sales. Thus, we expect Ashok Leyland's volume growth to rebound to ~12% in FY2013E, leading to a ~13% revenue CAGR over FY2011-13E. Pantnagar plant to mitigate raw-material cost pressures: The new tax-free facility at Pantnagar is relatively more profitable, with profitability estimated to be ~25% higher (cost savings of ~`35,000/vehicle) than that of existing plants. AL plans to ramp up Pantnagar production to ~35,000 vehicles in FY2012 from 12,800 in FY2011. We expect these benefits to partially offset the impact of raw-material cost pressures, enabling AL to maintain its operating margins at 10-11%. JV contribution yet to crystallize: AL has entered into an agreement to form a JV with Nissan Motor Company for the development, manufacture and distribution of LCV products. As AL has a negligible presence in the LCV space, this partnership would be positive for AL in the long run. The JV has already commenced commercial production of its first product, Dost, from September 2011. Further, the companys JV with John Deere is expected to start production from 2HFY2012.

Outlook and valuation

We have revised our volume estimates marginally downwards and built in flat volumes for FY2012. However, we have revised our net sales estimates upwards due to the expected improvement in net average realization. We have also revised our margin estimates upwards to factor in the pricing action and softening commodity prices. As a result, our EPS estimates stand revised by 15.5%/5.4% in FY2012E/13E to `2.3/`2.7.

Exhibit 9: Change in estimates

Y/E March (` cr) Net sales OPM (%) EPS Earlier Estimates FY2012E 12,344 9.6 2.0 FY2013E 14,178 10.1 2.6 Revised Estimates FY2012E 12,590 10.2 2.3 FY2013E 14,507 10.2 2.7 % chg FY2012E 2.0 60bp 15.5 FY2013E 2.3 5bp 5.4

Source: Company, Angel Research

We believe the next few quarters will also be challenging for the company, as commercial vehicle demand continues to be impacted by high interest rates and slowdown in industrial activity. However, we expect demand to revive from CY2012 with the likely easing of interest rates, thereby helping AL to post ~12% volume growth in FY2013E. At `28, AL is trading at 10.2x its FY2013E earnings. We maintain our Buy recommendation on the stock with a revised target price of `32, valuing the stock at 12x its FY2013E earnings.

November 4, 2011

Ashok Leyland | 2QFY2012 Result Update

Exhibit 10: Key assumptions

FY2008 M&HCV passenger (units) M&HCV goods (units) LCV (units) Total volume (units) % yoy chg Domestic (units) Exports (units) Segment-wise revenue break-up (` cr) Vehicle Engines Spare parts Services and others Total gross revenue (` cr)
Source: Company, Angel Research

FY2009 19,981 33,071 1,379 54,431 (34.7) 47,619 6,812 5,520 442 800 23 6,784

FY2010 18,481 44,345 1,100 63,926 17.4 57,947 5,979 6,746 369 885 36 8,035

FY2011 25,226 68,007 873 94,106 47.2 83,800 10,306 10,901 356 1,062 23 12,342

FY2012E 26,487 65,967 960 93,414 (0.7) 80,532 12,883 12,120 336 1,189 25 13,670

FY2013E 29,136 73,883 1,104 104,123 11.5 89,308 14,815 14,049 367 1,308 28 15,753

22,260 60,224 823 83,307 0.3 76,022 7,285 8,102 235 791 13 9,142

Exhibit 11: Angel vs. consensus

Angel estimates FY12E Net sales (` cr) EPS (`) 12,590 2.3 FY13E 14,507 2.7 Consensus FY12E 12,406 2.3 FY13E 14,066 2.8 Variation (%) FY12E 1.5 (1.1) FY13E 3.1 (1.9)

Source: Bloomberg, Angel Research

Exhibit 12: One-year forward P/E band

(`) 45 40 35 30 25 20 15 10 5 0 Share Price (`) 6x 9x 12x 15x

Exhibit 13: One-year forward P/E chart

(x) 35 30 25 20 15 10 5 0 One-yr forward P/E Five-yr average P/E

Jul-06

Jul-07

May-10

May-11

Dec-04

Jan-10

Dec-07

Aug-06

Dec-08

Jun-08

Mar-09

Jan-06

Nov-10

Aug-05

Apr-03

Oct-05

Feb-04

Oct-11

Jan-07

Jun-09

Nov-09

Nov-10

Source: Company, Angel Research

May-08

Source: Company, Angel Research

November 4, 2011

Oct-11

Jul-07

Ashok Leyland | 2QFY2012 Result Update

Exhibit 14: One-year forward EV/EBITDA band

(` cr) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 EV (` cr) 2x 4x 6x 8x

Exhibit 15: One-year forward EV/EBITDA chart

(x) 12 10 8 6 4 2 0 One-yr forward EV/EBITDA Five-yr average EV/EBITDA

Feb-09

Feb-11

Feb-09

Jul-04

Jul-06

Jul-08

Sep-08

May-07

Jul-09

May-11

Jun-10

Jun-06

Jan-06

Mar-05

Mar-07

Aug-05

Nov-03

Nov-05

Nov-07

Nov-06

Mar-08

Apr-03

Jan-10

Jun-10

Nov-10

Oct-09

Oct-11

Oct-07

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 16: Automobile - Recommendation summary

Company Ashok Leyland Bajaj Auto Hero MotoCorp Maruti Suzuki M&M Tata Motors TVS Motor Reco. Buy Neutral Neutral Accumulate Neutral Neutral Accumulate CMP Tgt. price (`) (`) 28 1,743 2,116 1,123 835 188 67 32 1,190 74 Upside (%) 15.3 5.9 10.3 P/E (x) FY12E 12.2 16.3 18.2 17.5 17.8 6.7 12.0 FY13E 10.2 15.0 16.3 13.2 15.7 6.1 10.9 EV/EBITDA (x) FY12E 7.0 11.4 11.0 10.9 11.7 4.7 6.1 FY13E 6.1 9.6 9.1 7.5 9.6 4.4 5.2 RoE (%) FY12E 14.8 55.5 63.7 12.3 25.0 44.6 24.5 FY13E 16.5 47.0 50.2 14.2 24.3 42.8 23.0 FY11-13E EPS CAGR (%) 7.3 10.4 18.8 4.4 11.1 3.7 19.2

Source: Company, Angel Research

November 4, 2011

Oct-11

Ashok Leyland | 2QFY2012 Result Update

Profit & Loss Statement

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation & Amortization EBIT % chg (% of Net Sales) Interest & other charges Other Income (% of PBT) PBT % chg Extraordinary Expense/(Inc.) Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Adjusted EPS (`) % chg FY08 9,142 1,206 7,935 7,935 8.4 7,128 5,764 161 614 590 808 20.1 10.2 177 630 20.8 7.9 76 84 13.6 638 5.6 19 169 27.2 469 451 5.9 5.7 1.8 1.7 (47.3) FY09 6,784 686 6,098 6,098 (23.1) 5,642 4,480 132 563 467 456 (43.5) 7.5 178 278 (56.0) 4.6 160 91 46.3 208 (67.3) 11 18 9.4 190 179 (60.3) 2.9 0.7 0.7 (60.3) FY10 8,035 628 7,407 7,407 21.5 6,648 5,212 135 667 634 760 66.6 10.3 204 555 100.1 7.5 102 91 18.1 545 161.3 40 121 24.0 424 384 114.6 5.2 1.6 1.4 114.6 FY11 12,342 976 11,366 11,366 53.4 10,148 8,113 235 970 831 1,218 60.3 10.7 267 950 71.1 8.4 189 41 5.1 802 47.2 2 171 21.3 631 630 64.2 5.5 2.4 2.4 64.2 FY12E 13,670 1,081 12,590 12,590 10.8 11,312 9,027 258 1,095 932 1,278 5.0 10.2 327 951 0.1 7.6 217 32 4.2 766 (4.5) 161 21.0 605 605 (3.9) 4.8 2.3 2.3 (3.9) FY13E 15,753 1,246 14,507 14,507 15.2 13,034 10,409 305 1,255 1,066 1,472 15.2 10.2 353 1,119 17.7 7.7 217 40 4.2 942 23.0 217 23.0 726 726 19.9 5.0 2.7 2.7 19.9

November 4, 2011

Ashok Leyland | 2QFY2012 Result Update

Balance Sheet
Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves & Surplus Shareholders Funds Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 2,942 1,417 1,526 529 610 2,875 451 824 1,600 2,272 603 22 3,290 4,939 1,540 3,399 998 264 3,166 88 790 2,288 2,141 1,025 10 5,695 6,019 1,769 4,250 561 326 4,152 519 973 2,660 2,961 1,191 5 6,334 6,692 2,058 4,634 358 1,230 4,367 180 794 3,394 3,528 839 4 7,065 7,428 2,385 5,043 371 1,347 4,389 104 906 3,378 3,458 932 4 7,698 7,952 2,738 5,214 398 1,403 5,159 122 1,044 3,992 4,066 1,093 4 8,112 133 2,016 2,149 888 254 3,290 133 3,341 3,474 1,958 263 5,695 133 3,536 3,669 2,280 385 6,334 133 3,830 3,963 2,658 444 7,065 266 3,930 4,196 3,058 444 7,698 266 4,344 4,610 3,058 444 8,112 FY08 FY09 FY10 FY11 FY12E FY13E

November 4, 2011

10

Ashok Leyland | 2QFY2012 Result Update

Cash Flow Statement

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Less: Others Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in loans and adv. Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY08 620 177 (670) (1,107) 169 1,066 (389) 189 84 1 247 226 (794) (320) 16 435 451 FY09 197 178 155 1,038 18 (526) 346 1 91 1,074 234 896 2,204 (363) 451 88 FY10 505 204 (297) (799) 121 1,090 (629) (63) 82 95 (514) 318 156 (620) (146) 431 88 519 FY11 800 267 (130) 176 171 591 (470) (904) (190) 41 (1,523) 378 233 (19) 592 (339) 519 180 FY12E 766 327 (75) 103 161 753 (750) (117) (72) 32 (907) 133 400 309 (764) 79 (75) 180 104 FY13E 942 353 (70) (26) 217 1,035 (550) (56) 105 40 (462) 233 (789) (555) 18 104 122

(614) (2,480)

(729) (2,042)

November 4, 2011

11

Ashok Leyland | 2QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x)
P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) Working capital cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Interest) (0.1) (0.2) 8.3 0.5 3.5 1.7 0.4 1.9 5.5 0.3 1.0 5.0 0.4 1.3 4.4 0.3 1.0 5.2 2.9 53 21 82 15 1.5 76 40 114 33 1.4 73 49 110 40 1.8 62 35 90 21 1.8 63 35 88 22 1.9 64 37 90 23 20.9 22.4 22.3 6.2 6.5 6.4 9.2 12.4 10.7 14.2 17.0 16.5 12.9 15.1 14.8 14.2 16.7 16.5 7.9 0.7 3.1 18.0 7.3 0.0 18.0 4.6 0.9 1.7 7.1 10.2 0.3 6.3 7.5 0.8 1.7 9.7 3.7 0.4 12.2 8.4 0.8 2.3 14.9 6.0 0.4 18.0 7.6 0.8 2.1 12.7 6.0 0.3 15.0 7.7 0.8 2.2 13.3 5.5 0.4 16.1 1.7 1.7 2.4 0.8 8.0 0.7 0.7 1.4 0.5 7.9 1.4 1.4 2.2 0.8 8.8 2.4 2.4 3.4 1.0 10.0 2.3 2.3 3.5 0.8 10.9 2.7 2.7 4.1 1.0 12.4 16.4 11.4 3.5 2.7 0.8 8.9 2.2 41.3 20.0 3.5 1.8 1.3 19.7 1.6 19.2 12.6 3.2 2.7 1.1 11.6 1.4 11.7 8.2 2.8 3.6 0.7 7.1 1.2 12.2 7.9 2.6 2.7 0.7 7.0 1.2 10.2 6.8 2.2 0.4 0.6 6.1 1.1 FY08 FY09 FY10 FY11 FY12E FY13E

November 4, 2011

12

Ashok Leyland | 2QFY2012 Result Update

Research Team Tel: 022 3935 7800 DISCLAIMER

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Ashok Leyland No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

November 4, 2011

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