Valuation of Ashok Leyland

In July 2013 Ashok Leyland (AL) surprised market participants by reporting a negative Profit after Tax (PAT) of Rs.1420 million for Q1-FY2014 adjusted to Rs. 1,350 million . Though analysts had expected AL to report a loss, the figures were much higher than they had anticipated. According to the estimations of Angel Broking Ltd analysts, AL was expected to generate a net loss of Rs. 740 million for the period (Refer to Exhibit-I for Actuals vs. Estimates of AL for Q1-FY2014). The results had an impact on the market value of AL’s stock. The stock traded at a three-month low price of Rs. 15.65 on the Bombay Stock Exchange (BSE) (Refer to Exhibit-II for Market Prices of AL’s Stock at Bombay Stock Exchange).

Without being constrained by the performance of the company, the management of AL decided to continue with their efforts planned for the current fiscal year 2014 (2014) “Although the entire commercial vehicle industry has had a tough Quarter 1, we, at Ashok Leyland, have remained focused on being future-ready by staying committed to our product development, network expansion and cost control programmes,”