Ashok Leyland revenue jumped on 29.5% and EBITDA Margin showed almost no change

18-05-2018 • About Ashok Leyland ($ASHOKLEY) • By InTwits

Ashok Leyland reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:

Ashok Leyland is a fast growth stock: FY2018 revenue growth was 29.5%, 5 year revenue CAGR was 18.9% at FY2018 ROIC 16.5%
EBITDA Margin is quite volatile: 14.3% in FY2018, 14.4% in FY2017, 14.3% in FY2016, 10.7% in FY2015, 4.1% in FY2014
Ashok Leyland has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's in pair with industry average of 6.2%
CAPEX is quite volatile: ₹6,512m in FY2018, ₹4,489m in FY2017, ₹2,619m in FY2016, ₹2,509m in FY2015, ₹4,081m in FY2014
The company has highly profitable business model: ROIC is 16.5%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Ashok Leyland's Revenue jumped on 29.5%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.7% to 12.1% in FY2018. During FY2014-FY2018 EBITDA Margin topped in FY2017 at 14.4%.

SG&A as a % of Revenue showed almost no change in FY2018.

Net Income margin decreased slightly on 1.0 pp from 6.9% to 5.9% in FY2018. Net Income margin followed a growing trend at 2.1 pp per annum in FY2014-FY2018.

Investments (CAPEX, working capital and M&A)

In FY2018 the company had CAPEX/Revenue of 2.2%. Ashok Leyland showed small growth in CAPEX/Revenue of 0.56 pp from 1.6% in FY2015 to 2.2% in FY2018. For the last three years the average CAPEX/Revenue was 1.8%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2016 at 1.3% and was growing since that time.

Return on investment

The company operates at high and attractive ROE (25.5%) while ROIC is a bit lower (16.5%). ROIC increased slightly on 1.7 pp from 14.8% to 16.5% in FY2018. ROE decreased slightly on 1.8 pp from 27.3% to 25.5% in FY2018. ROIC stuck to a growing trend at 4.1 pp per annum in FY2014-FY2018. ROE stuck to a growing trend at 8.3 pp per annum in the last 5 years.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is 3.7x. Net Debt / EBITDA dropped on 0.2x from 3.7x to 3.4x in FY2018. Debt jumped on 19.9% while cash jumped on 15.3%.

Ashok Leyland has short term refinancing risk: cash is only 21.9% of short term debt.

Financial and operational results

FY ended 31-03-2018

Ashok Leyland ($ASHOKLEY) key annual financial indicators

mln. INR	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	114,867	153,409	208,708	228,710	296,196	29.5%
SG&A		4,332	2,845	5,224	6,357	21.7%
EBITDA	4,709	16,361	29,789	32,939	42,484	29.0%
Net Income	-1,641	1,339	6,819	15,894	17,604	10.8%
Balance Sheet
Cash	1,064	8,990	17,111	10,577	12,198	15.3%
Short Term Debt	30,088	28,505	35,265	42,922	55,630	29.6%
Long Term Debt	54,912	62,194	75,271	88,764	102,281	15.2%
Cash flow
Capex	4,081	2,509	2,619	4,489	6,512	45.1%
Ratios
Revenue growth	-8.0%	33.6%	36.0%	9.6%	29.5%
EBITDA growth	-46.3%	247.5%	82.1%	10.6%	29.0%

EBITDA Margin	4.1%	10.7%	14.3%	14.4%	14.3%	-0.1%
SG&A, % of revenue		2.8%	1.4%	2.3%	2.1%	-0.1%
Net Income Margin	-1.4%	0.9%	3.3%	6.9%	5.9%	-1.0%
CAPEX, % of revenue	3.6%	1.6%	1.3%	2.0%	2.2%	0.2%

ROIC	-0.5%	7.6%	15.7%	14.8%	16.5%	1.7%
ROE	-3.9%	3.2%	14.0%	27.3%	25.5%	-1.8%
Net Debt/EBITDA	17.8x	5.0x	3.1x	3.7x	3.4x	-0.2x

Peers in Commercial Vehicles

Below you can find Ashok Leyland benchmarking vs. other companies in Commercial Vehicles industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Ashok Leyland stock price chart

Ashok Leyland financials

mln.	FY2010	FY2011	FY2012

Revenue	72,447	111,771	129,043
EBITDA	7,714	12,244	12,504
Net income	4,237	6,313	5,660
CAPEX	6,947	3,526	6,978
Debt	28,784	25,683	30,979
Cash	5,189	1,795	325.6

About Ashok Leyland

Ashok Leyland Limited manufactures and sells commercial vehicles in India and internationally. Its products include buses, such as city, sub-urban, inter-city, school and staff, and special buses; trucks for various applications, including long-hauls, distribution, construction, and mining; light vehicles; and defense vehicles, such as rapid intervention vehicles, field artillery tractors, light recovery vehicles, water bowsers, truck fire fighters, and fuel dispensers for the armed forces and other international customers. The company also offers power solutions, such as engines that power generator sets, marine applications, earth-moving equipment, compressors, cranes, harvester combines, and others. In addition, it provides crankshafts, gears and shafts, crown wheels and pinions, filters, brake linings, clutch plates and pressure, face plates, cylinder liners, pistons and rings, hubs and brake-drums, thinwall bearings, ball and roller bearings, gasket kits, trailer axle assemblies, king pin kits and tie rod end kits, water pump assemblies and kits, oil pump assemblies, and engine and gear oils. The company was founded in 1948 and is headquartered in Chennai, India. Ashok Leyland Limited is a subsidiary of Hinduja Automotive Limited.