Ashok Leyland gains 4% post April sales number, credit rating upgrade

Ashok Leyland shares rose 4 per cent to Rs 90.40 on the National Stock Exchange (NSE), after the company reported 10 per cent rise in the domestic vehicles sales at 13,141 units in April 2019. The commercial vehicles company had sold 11,951 vehicles in domestic market during the same month last year.

The stock recovered 5.5 per cent from its early morning low of Rs 85.80 on the NSE. The counter has seen huge trading volumes with a combined 16.07 million shares changed hands on the NSE and BSE till 10:58 am.

In March 2019, Ashok Leyland had reported 5 per cent decline in total vehicles sales at 20,521 in domestic markets, as compared to 21,533 units in the year-ago month.

Meanwhile, rating agency ICRA upgraded the long-term rating of fund based limits of Ashok Leyland to AA+ from AA with stable outlook.

The upgrade in the long-term rating considers the sustained improvement in Ashok Leyland’s credit profile (both standalone and consolidated) in the last three-year period ending FY2019e, ICRA said in its rating rational.

The standalone credit profile is marked by strong volume growth in medium and heavy commercial vehicle (M&HCV) (domestic sales volume up by 10 per cent, three-year CAGR ending FY2019), stable market share (around 34 per cent), improving profitability supported by scale economies, increasing skew towards higher tonnage vehicles, various cost control initiatives, healthy liquidity position and its robust debt protection metrics, it added.

ICRA believes Ashok Leyland’s financial profile will remain healthy supported by stable demand outlook for the M&HCV and LCV segments. The outlook may be revised to 'Positive' with sustained growth in earnings, diversification of revenue base to counter cyclicality and comfortable debt protection metrics (both standalone and consolidated).