Fundamental analysis of Ashok Leyland by Kartik parashar
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INTRODUCTION OF INDIAN AUTOMOBILE INDUSTRY, INTRODUCTION OF COMPANY, HISTORY, OVER VIEW , FINANCIAL ANALYSIS, COMPETITORS
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Fundamental analysis of Ashok Leyland by Kartik parashar
- 1. PRESTIGE INSTITUTE OF MANAGEMENT PRESENTATION ON FUNDAMENTAL ANALYSIS OF ASHOK LEYLAND PRESENTED BY: KARTIK PARASHAR
- 2. AUTOMOBILE INDUSTRY IN INDIA β’ The Indian auto industry is one of the largest in the world. β’ The automotive industry in India is one of the largest in the world with an annual production of 23.37 million vehicles in FY 2014-15, following a growth of 8.68% over the last year. β’ The automobile industry accounts for 7.1 per cent of the country's gross domestic product (GDP). β’ The Two Wheelers segment, with 81 per cent market share, is the leader of the Indian Automobile market, owing to a growing middle class and a young population.
- 4. MAJOR PLAYERS IN M&HCV INDUSTRY
- 7. INTRODUCTION OF THE COMPANY β’ Ashok Leyland is an Indian automobile manufacturing company headquartered in Chennai, India. β’ It was founded in 1948, it is the 2nd largest commercial vehicle manufacturer in India, 4th largest manufacturer of buses in the world and 16th largest manufacturer of trucks globally. β’ Operating six plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. β’ It sells about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle segment with a market share of 38.39% (2015-16). β’ With passenger transportation options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment. β’ In the trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks.
- 10. ASHOK LEYLAND: AN OVERVIEW TYPE PUBLIC TRADED AS NSE: ASHOKLEY BSE: 500477 INDUSTRY AUTOMOTIVE FOUNDED 07 SEP 1948 REVENUE Rs 206.58 billion PARENT Hinduja Group SECTOR M&HCV SHARE PRICE 76.75 (07.12.2016) 52 WEEK L/H 73.50/112.90 HEADQUARTER CHENNAI, TN, INDIA
- 11. INVESTMENT IN THE INDUSTRY β’ In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. β’ The industry has attracted Foreign Direct Investment (FDI) worth US$ 15.06 billion during the period April 2000 to March 2016, according to data released by Department of Industrial Policy and Promotion (DIPP).
- 12. GOVERNMENT INITIATIVES IN INDUSTRY β’ Government of India aims to make automobiles manufacturing the main driver of βMake in Indiaβ initiative, as it expects passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26. β’ In the Union budget of 2015-16, the Government has announced to provide credit of Rs 850,000 crore (US$ 124.71 billion) to farmers, which is expected to boost the tractors segment sales. β’ The Government plans to promote eco-friendly cars in the country i.e. CNG based vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent ethanol blending in petrol.
- 21. PARTICULARS P/E RATIO 2016 2015 2014 2013 2012 BASIC EPS 2.54 1.20 0.11 1.63 2.13 DIVIDEND SHARE 0.95 0.45 0.00 0.60 01 NET PROFIT 721.78 334.81 29.38 433.71 565.98 REVENUE 66.14 47.66 37.37 46.91 48.37 INVESTMENT 0.00 408.45 384.37 0.00 0.00 TOTAL C.A. 5290 4693 3855 4296 4303 NET SALES 206587 153409 114867 124812 12943 PAT 10707 1339 (1641) 4337 5660 P/E RATIO 24.74
Editor's Notes
- The most important ratio is Net Profit Margin percentage or Net margin. It tells us how much out of every sale ASHOKLEY gets to keep after everything else has been paid for. It is highly variable from one industry sector to another. An ideal company has consistent profit margins. Gross Profit Margin = ( Revenue - Cost of Revenue ) / Revenue Net Profit Margin = Net Income / Revenue
- From an investor's perspective, ROE is a key ratio. The ROE (after subtracting preferred shares) tells common shareholders how effectively their money is being employed. Ideal long term average ROE should be above 15%. Average 2 year ROE of Ashok Leyland Ltd. :Β 12% Return on Equity = ( Net Income - Preferred Dividend ) / Shareholder's Equity
- Current Ratio measures the company's current assets against its current liabilities. Ideally the current ratio should be greater than 1.5. Avoid investing in companies whose current ratio is less than 1. There are exceptions to this rule, some good companies can have less than 1 or even a negative current ratio when they receive money faster from their customers than they have to pay to their vendors.
- An interest coverage ratio less than 1.5 is a red flag. The higher the ratio the less a company is burdened by debt. If a company has no debt or the loan interest is being paid by interest income from investments or other activities the ratio is zero which of course is excellent. A negative ratio tells us that the company cannot even pay its interest on loans from its operating income, stay far away from such companies.