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Ashok Leyland tenacious in weak market
March 10, 2003 12:10 IST
Ashok Leyland recovered from an early low of Rs 93.30 on Monday following impressive sales numbers declared by the company last week.
The numbers helped the scrip of the truck and bus maker keep the overall negative sentiment at bay, as it was placed higher by 1.63% at Rs 96.50 by 10:20 IST. It registered volumes of 645 shares on BSE by then.
Late Friday afternoon, Ashok Leyland said it recorded a 36.1% rise in sales to 3,939 units for February 2003 as against 2,894 units in the same month last year. Domestic sales leaped by 34.6% to 3,672 units. Exports soared 60.8% to 267 units.
Sales for February 2003 were higher than that (3,567 vehicles) of January 2003 by 10.4%. Cumulative (April 2002-February 2003) sales went up by 24% to 31,103 vehicles from 25,081 units a year ago. During February this year, ALL recorded a 32.4% rise in domestic sale of medium-duty commercial vehicles at 3,614 units. Of this, sale of medium-duty goods vehicles were even more impressive, with a growth rate of 41% to 2,696 vehicles.
The scrip's progress on Monday may have been even better if not for the overwhelming tensions in the international political arena. Iraq's warning of an inevitable war despite it disarming has set of further alarm bells, prompting market players to offload and hold cash.
Meanwhile, ALL's optimism this fiscal has been indicated in the fact that the company revised sales growth target to 20% from 15% for financial year 2002-03 in February 2003. The revision comes on the back of a spurt in M&H truck sales. The company plans to sell over 34,000 vehicles during this year. However, bus sales continue to be sluggish and may grow only at a rate of 2%.
The company has expressed optimism over its vehicle sales in the current quarter as well, following signs of a revival in demand from the southern and western regions of India, especially for multi-axle vehicles. Ashok Leyland is a market leader in south India and a revival in demand there could spur the company's overall sales. Increased demand from the golden quadrilateral project is being seen as the trigger for growth in demand.
Earlier, the company announced the launch of the 1612 with H engine in north and south India. The product has been received well in both zones. The rest of the country will be covered in the next three months. This, the company expects, should significantly boost sales. The fourth quarter (January-March 2003) is crucial for ALL as 40% of the company's sales materialise during that period. The quarter also accounts for 60% of the company's profit
For the third quarter ended 31 December 2002, the leading commercial vehicles maker and Hinduja group flagship registered a 72% growth in net profit to Rs 23.28 crore on a 32% growth in top line to Rs 574.55 crore (Rs 5.74 billion). ALL sold a total of 7,776 vehicles during the third quarter of the current year, a growth of 27%. Bottom line growth was aided to a large extent by the compression of interest expenses. But operating margin came under pressure in the quarter under review.
ALL recently launched a twin bin two-way tipper ‘Rubic', which is meant to be used primarily by the construction industry.
Earlier, ALL launched several new vehicles for the Indian army, including a high mobility vehicle, a field artillery tractor, a truck fire fighting vehicle and a mid-range logistics vehicle. All these vehicles are indigenously produced and there are no plans to join hands with an overseas defence equipment manufacturer. ALL already supplies the 'Stallion' truck and light recovery vehicles to the armed forces.
ALL recently bagged major export orders for buses from Sri Lanka and Bangladesh worth Rs 34 crore. The Sri Lankan order was from People Leasing Company for the supply of 250 fully-built, 42-seater Viking buses. The Bangladesh order was from Pragoti Industries for the supply of 300 Stag mini buses in completely knocked down form.
ALL, belonging to the Hinduja group, is a leading supplier of buses to state transport undertakings. The company plans to launch two new tractor-trailers - 4421 and 3518. These will be fitted with A/C sleeper cab, ABS / electronics, which will be optional, and a high powered BS 2 Hino engine.
The promoters hold 50.9% stake in ALL, while the public, institutions and foreign bodies have 10.3%, 24% and 12.95% in the company, respectively.
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