Ashok Leyland slips after below estimate Q2 earnings

NEW DELHI: Shares of Ashok Leyland slipped 3 per cent on Thursday after the company's September quarter earnings failed to meet Street expectations on the back of lower-than-expected top line growth and high depreciation charge.

The company, which is the flagship arm of the Hinduja Group, reported a 137 per cent jump in Q2 net profit from Rs 121 crore in September 30, 2014 to Rs 287 crore in the ongoing quarter. Revenues of the automaker grew 53.5 per cent during the quarter to Rs 4,940 crore from Rs 3,218 crore in the same period last year.

In reaction to the below-estimate earnings, the scrip slumped 4.12 per cent to hit the day's low of Rs 88.30.

"Higher depreciation expenses at Rs 113 crore impacted profitability. Net profit at Rs 287 crore was below expectations of Rs 355 crore," said Bharat Gianani, senior research analyst, Angel Broking.

Despite the below-par Q2 show, Angel Broking continues to maintain a 'buy' rating on the stock.

ALL's sales volume grew 51 per cent for the quarter under review, boosted largely by a 64 per cent growth in the medium and heavy commercial vehicle categories. The Ebitda margin of the company grew 12 per cent during the quarter under review from 7.1 per cent in the same period a year ago.

"Ebidta margins at 12% were at a five-year high coming broadly in line with our estimates of 12.6%," the brokerage said. "Soft commodity prices and operating leverage led to sharp margin improvement. However, given the topline miss, the Ebidta at Rs 594 crore was lower than estimates of Rs 668 crore."