MOSL: ASHOK LEYLAND (Buy)-Below-estimate-adverse product mix, RM inflation dent EBITDA margin
Ashok Leyland: Below-estimate; adverse product mix, RM inflation dent EBITDA margin
(AL IN, Mkt Cap USD5.6b, CMP INR141, TP INR181, 28% Upside, Buy)
- Volumes, realization drive revenue: AL's revenue grew 23.7% YoY (+22.8% QoQ) to INR87.7b (est. of INR86.5b), driven by volume growth of 23.4% YoY (+26.1% QoQ) and realization growth of 0.2% YoY (-2.5% QoQ) to INR1.49m (est. of INR1.47m). AL took a price increase of 1-2% in Jan'18. It indicated further price hike of ~2% in April to compensate for RM inflation.
- EBITDA margin of 11.8% misses estimate of 13.1%: Gross margin shrank 560bp YoY (-190bp QoQ) to 28.1% (est. of 29.4%) due to an adverse product mix and RM inflation. EBITDA grew 41.5% YoY (+31% QoQ) to INR10.3b (est. of INR11.3b), resulting in an EBITDA margin of 11.8% (est. of 13.1%). Reversal of heavy discounting in 4Q, coupled with price hikes, eased pressure on margins. Higher other income and lower tax led to adj. PAT growth of 36.5% YoY to INR6.7b (est. of INR6.9b). For FY18, revenue/EBITDA/PAT grew 31.1%/24.4%/27.4%.
State Bank of India provides a range of products and services to personal, commercial enterprises, large corporates, public bodies and institutional customers. Its segments include Treasury, which includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts; Corporate/Wholesale Banking, which comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group; Retail Banking, which comprises branches in National Banking Group, which primarily includes Personal Banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group, and Other Banking Business, which includes the operations of all the Non-Banking Subsidiaries/Joint Ventures other than SBI Life Insurance Co. Ltd. and SBI General Insurance Co. Ltd. The Company had approximately 22,500 branches and 58,000 ATMs.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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