Ashok Leyland Ltd reported net sales at R2,550 crore (-23% yoy) and adjusted PBT loss of R140 crore (versus PBT profit of R160 crore in Q2FY13) driven by subdued heavy truck sales volumes. Working capital situation deteriorated during the first half of the financial year amid challenging market conditions. We remain cautious in our outlook for CV cycle in India due to the current low utilization levels of CV fleet. We have a reduce rating on the stock with a target price of R15 and will revise our earning estimates post the result concall.
Ashok Leyland reported a PBT loss of R91.4 crore in Q2FY14 versus our estimate of R162.1 crore, led by an exceptional income of R43.8 crore during the quarter on account of sale of Defiance Testing & Engineering Services. Net sales of R2,550 crore (-23% yoy) were 6% above our estimate while reported Ebitda came at R56.2 crore(-83% yoy) versus our estimate of R24.9 crore. The steep yoy decline in net sales was led by 23% yoy decline in volumes.
Working capital increased by R640 crore during April-September 2013. The increase was primarily led by decline in creditor days from 73 days as on March 31, 2013 to 59 days as on September 30, 2013. Debtor days also increased to 47 days as on September 30, 2013 from 42 days as on March 31, 2013. Inventory days were fairly stable.
Kotak Institutional Equities