Discover Ashok Leyland’s automotive tale with thorough Fundamental and Technical Analysis for insightful investment decisions.
In the bustling landscape of India’s automotive sector, one name shines brightly as a beacon of innovation and excellence – Ashok Leyland. Founded in 1948 under the banner of Ashok Motors, this illustrious company has evolved into a powerhouse in the automotive domain. With its headquarters nestled in the vibrant city of Chennai, Ashok Leyland stands as a testament to India’s industrial prowess and ingenuity.
Through strategic collaborations and relentless pursuit of excellence, Ashok Leyland has etched its name as a leader in commercial vehicles, buses, and trucks, both domestically and globally. Join us as we embark on a journey to unravel the remarkable story of Ashok Leyland, a journey marked by innovation, resilience, and unwavering commitment to quality.
Table of Contents
About Ashok Leyland
Ashok Leyland, a prominent Indian multinational automotive manufacturer headquartered in Chennai, boasts a rich history dating back to its establishment in 1948 as Ashok Motors. In 1955, following a collaboration with British Leyland, it adopted the name Ashok Leyland. Today, it is under the ownership of the Hinduja Group. Renowned for its prowess in the automotive industry, Ashok Leyland holds the distinction of being the second-largest manufacturer of commercial vehicles in India, with a substantial 32.1% market share in 2016. Globally, it ranks as the third-largest bus manufacturer and the tenth-largest truck manufacturer. Operating from Chennai, its manufacturing footprint spans Ennore, Bhandara, two sites in Hosur, Alwar, and Pantnagar.
Additionally, it has established overseas manufacturing units, including a bus manufacturing facility in Ras Al Khaimah (UAE) and another in Leeds, United Kingdom. Notably, Ashok Leyland collaborates with the Alteams Group for the production of high-precision die-casting extruded Aluminium components, showcasing its commitment to innovation and diversification. With nine operational plants, Ashok Leyland also caters to the production of spare parts and engines for various industrial and marine applications.
Subsidiaries of Ashok Leyland
- Switch Mobility
- Hinduja Leyland Finance Limited
- Hinduja Foundries
- Shley Alteams India Private Limited
- Ashok Leyland Defence System
- Ashley Aviation Limited
- Ashok Leyland Nissan Vehicles Limited
- Nissan Ashok Leyland Technologies Limited
- Ashok Leyland (Nigeria) Limited
- Nissan Leyland powertrain Pvt Ltd
- Ashley Transport Services limited
- Ashok Leyland John Deere Construction Company Private Limited
- Ashok Leyland (Chile) S.A
Share Holding Pattern of Ashok Leyland
These figures represent significant actions taken by a company that directly influence shareholder value. They signify material changes within the company and have an impact on its stakeholders:
- Promoter Shareholding: 51.52%
- FII (Foreign Institutional Investor) Shareholding: 21.45%
- DII (Domestic Institutional Investor) Shareholding: 6.14%
- MF (Mutual Fund) Shareholding: 5.85%
- Public Shareholding: 14.79%
In the realm of investment, conducting a comprehensive fundamental analysis is crucial for making informed decisions. Let’s dissect the key financial ratios of Ashok Leyland for March 2020 to March 2023, offering insights into its financial health and performance.
Fundamental Analysis of Ashok Leyland | ||||
Ratio | March 2023 | March 2022 | March 2021 | March 2020 |
Profitability Ratio | ||||
Gross Profit Margin | 30.84% | 32.87% | 37.38% | 38.94% |
Net Profit Margin | 3.81 | 2.49 | -2.05 | 1.37 |
Return on Equity (ROE) | 15.79% | -4.91% | -2.10% | 4.32% |
Liquidity Ratio | ||||
Current Ratio | 1.08 | 1.000 | 0.981 | 1.03 |
Quick Ratio (Acid-Test Ratio) | 0.926 | 0.863 | 0.827 | 0.931 |
Solvency Ratio | ||||
Debt to Equity Ratio | 3.64 | 3.28 | 3.04 | 2.07 |
Interest Coverage Ratio | 0.163 | 0.914 | 0.914 | 1.43 |
Efficient Ratio | ||||
Inventory Turnover Ratio | 9.64 | 6.99 | 6.00 | 5.83 |
Account Receivable Turnover Ratio | 11.16 | 8.00 | 6.18 | 3.36 |
Valuation Ratio | ||||
Price to earning Ratio (P/E) | 32.91 | -96.11 | -202.68 | 37.43 |
Price to Book Ratio (P/B) | 5.20 | 4.01 | 3.67 | 1.62 |
Growth Ratio | ||||
Earning per Share (EPS) Growth | 4.23 | -1.22 | -0.560 | 1.15 |
Revenue Growth | 36,260.28 | 21,764.42 | 15,420.95 | 17,590.81 |
Profitability Ratio
Gross Profit Margin:
This ratio signifies the percentage of revenue retained after deducting the cost of goods sold. Ashok Leyland’s Gross Profit Margin experienced a gradual decline from 38.94% in March 2020 to 30.84% in March 2023. This trend suggests potential challenges in maintaining profitability amidst evolving market dynamics and cost pressures.
Net Profit Margin:
Reflecting the proportion of net income to revenue, the Net Profit Margin portrays Ashok Leyland’s bottom-line profitability. While the company faced a negative Net Profit Margin in March 2021, it rebounded significantly in subsequent years, indicating a turnaround in profitability and operational efficiency.
Return on Equity (ROE):
ROE measures a company’s ability to generate profits from shareholders’ equity. Despite a negative ROE in March 2022, Ashok Leyland showcased remarkable improvement in March 2023, signifying enhanced profitability and effective utilization of shareholders’ funds.
Liquidity Ratio
Current Ratio:
This ratio compares current assets to current liabilities, indicating the company’s ability to cover immediate debts. While Ashok Leyland’s Current Ratio remained relatively stable over the years, it hovered slightly above or below the ideal threshold of 1, implying a balanced liquidity position.
Quick Ratio (Acid-Test Ratio):
The Quick Ratio assesses the company’s ability to meet short-term obligations using its most liquid assets. Ashok Leyland’s Quick Ratio showed a slight improvement over the years, reflecting enhanced liquidity and resilience in meeting immediate financial commitments.
Solvency Ratio
Debt to Equity Ratio:
This ratio indicates the proportion of debt financing relative to equity. Ashok Leyland witnessed a gradual increase in the Debt to Equity Ratio, suggesting higher reliance on debt financing to support its operations and expansion initiatives.
Interest Coverage Ratio:
Reflecting the company’s ability to cover interest expenses, the Interest Coverage Ratio exhibited fluctuations over the years, indicating varying degrees of financial leverage and ability to service debt obligations.
Efficiency Ratio
Inventory Turnover Ratio:
This ratio measures the frequency with which inventory is sold and replaced within a given period. Ashok Leyland’s Inventory Turnover Ratio showcased an upward trend, indicating improved inventory management and operational efficiency.
Account Receivable Turnover Ratio:
Reflecting the efficiency of credit management, the Account Receivable Turnover Ratio exhibited positive trends, suggesting timely collection of receivables and effective credit control measures.
Valuation Ratio
Price to Earning Ratio (P/E):
Despite fluctuations, Ashok Leyland’s P/E Ratio remained relatively high in March 2023, reflecting investors’ confidence and positive market sentiment towards the company’s future earnings potential.
Price to Book Ratio (P/B):
The P/B Ratio indicates the company’s market value relative to its book value per share. Ashok Leyland’s P/B Ratio witnessed an upward trajectory, suggesting growing investor interest and perceived value in the company’s assets and operations.
Growth Ratio
Earning per Share (EPS) Growth:
Despite fluctuations, Ashok Leyland’s EPS Growth exhibited positive trends in recent years, indicating the company’s resilience and ability to generate sustainable earnings growth.
Revenue Growth:
Reflecting robust revenue expansion, Ashok Leyland’s Revenue Growth showcased consistent upward trends, underscoring its market strength and growth potential in the automotive sector.
Considering Ashok Leyland’s market position, growth potential, and financial performance, it’s a promising investment option. With a diversified portfolio, buying and holding Ashok Leyland stock could yield favourable returns over time. However, investors should conduct thorough research, monitor market trends, and assess their risk tolerance before making any investment decisions. Overall, Ashok Leyland appears to be a compelling investment opportunity for those seeking long-term growth in the automotive sector.
Technical Analysis of Ashok Leyland
Technical analysis of Ashok Leyland involves evaluating price movements and trading volumes to forecast future price movements. Technical analysis depends on charts and statistical indicators. analysts use various techniques, such as trend analysis, chart patterns, and technical indicators like moving averages or relative strength index (RSI), to identify potential buying or selling opportunities for Ashok Leyland. The main goal of technical analysis of Ashok Leyland share price is to predict future price movements based on historical data and market psychology, helping investors make informed decisions about when to enter or exit trades. So, bellow we are explaining Various techniques as of 30th April 2024 for technical analysis of Ashok Leyland.
Price action
Price action and price level of Ashok Leyland (As of 30th April) | |||
Price action | Daily Timeframe | Weekly Timeframe | Monthly Timeframe |
Candlestick | Strong Bullish Candlestick | Strong Bullish Candlestick | Strong Bullish Candlestick |
Chart Pattern | Inverted Head and Shoulder Pattern | Bullish Flag Pattern | Rectangular Candlestick Chart Pattern |
Price Support Level | 176-177 | 168-170 | 164-167 |
Price Level | 192.65 is Current price | 52 weeks High 194.25 | 52 weeks low 143.20 |
When assessing the price action and price levels of Ashok Leyland, it’s crucial to analyze various timeframes to gain a comprehensive understanding of its market dynamics. Ashok Leyland’s current price stands at 192.65, with a 52-week high of 194.25 and a low of 143.20. These levels illustrate the stock’s recent price range, aiding investors in assessing its performance and potential investment decisions.
Daily Timeframe:
On the daily candlesticks, Ashok Leyland exhibits strong bullish momentum, evidenced by a robust bullish candlestick that surpassed its all-time high of 191.5. Additionally, the presence of an Inverted Head and Shoulder pattern, accompanied by a decisive breakout above the neckline of 180 with substantial volume, indicates a bullish trend reversal. Moreover, the price support level of 176-177 suggests a strong foundation for potential upward movements.
Weekly Timeframe:
In the weekly candlesticks, Ashok Leyland continues to display bullish sentiment with another strong bullish candlestick formation. The presence of a Bullish Flag pattern suggests a brief consolidation phase followed by a potential continuation of the uptrend. However, investors should monitor the price support level of 168-170 for any signs of retracement or consolidation.
Monthly Timeframe:
On the monthly candlesticks, Ashok Leyland maintains its bullish trajectory, as evidenced by another strong bullish candlestick formation. The breakout of a Rectangular Candlestick Chart Pattern further reinforces the bullish bias, indicating a significant shift in momentum towards higher price levels. Additionally, the price support level of 164-167 provides a crucial reference point for long-term investors, signaling potential buying opportunities during price retracements.
In conclusion, the price action and price levels of Ashok Leyland depict a robust bullish trend across multiple timeframes. The presence of strong bullish candlesticks, coupled with bullish chart patterns and well-defined price support levels, indicates favorable conditions for investors and traders. However, it’s essential to exercise caution and conduct thorough risk management, considering potential market fluctuations and volatility. Overall, Ashok Leyland appears poised for further upside potential, offering compelling opportunities for those seeking to capitalize on bullish market sentiment.
Indicators Use for Technical Analysis
Bolinger Band (BB):
Bolinger Band Price level in Ashok Leyland (As of 30th April) | |||
| Upper Band | Median | Lower Band |
Bolinger Band | 187.56 | 177.01 | 166.47 |
The Bolinger Bands serve as a valuable tool for assessing the volatility and potential price movements of Ashok Leyland stock. On 26th April, the price surged beyond the upper band, reaching 187.56, indicating a significant bullish momentum. Currently, the stock trades above the upper band, suggesting continued bullish sentiment. The median price of 177.01 and the lower band at 166.47 provide crucial reference points for traders and investors. The median signifies the average price, while the lower band represents a potential support level. Understanding these levels aids in making informed decisions regarding entry, exit, and risk management strategies.
Moving Average (MA):
Moving Average price level in daily candlestick of Ashok Leyland (As of 30th April) | ||
Moving Average | 100 Day | 200 Day |
Simple Moving Average (SMA) | 173.83 | 176.02 |
Exponential Moving Average (EMA) | 173.70 | 171.05 |
The moving averages provide valuable insights into Ashok Leyland’s price trends. The Simple Moving Average (SMA) for the 100-day period stands at 173.83, indicating price consolidation since October 2023. Similarly, the Exponential Moving Average (EMA) for the same period is 173.70, reflecting continued consolidation. These levels serve as crucial support zones, suggesting stability in the stock’s price movement. Additionally, the 200-day SMA and EMA at 176.02 and 171.05 respectively offer further reference points for investors. Understanding these moving average levels aids in identifying potential trend reversals, entry and exit points, and overall market sentiment.
Conclusion
Based on the comprehensive analysis provided, it is recommended to consider buying and investing in Ashok Leyland stock. The company’s rich history, strong market position, and robust financial performance highlight its potential for long-term growth and profitability. With a diverse portfolio of subsidiaries, solid shareholding pattern, and favourable fundamental indicators, Ashok Leyland presents an attractive opportunity for investors seeking exposure to the automotive sector. Additionally, technical analysis suggests a bullish trend, supported by strong price action and price levels across various timeframes. Therefore, investors are encouraged to capitalize on Ashok Leyland’s promising outlook and consider adding it to their investment portfolio for potential returns in the future.
FAQs
- What is Ashok Leyland?
Ashok Leyland is an Indian multinational automotive manufacturer renowned for producing commercial vehicles, buses, and trucks.
- When was Ashok Leyland founded?
Ashok Leyland traces its roots back to 1948 when it was established as Ashok Motors. It later adopted the name Ashok Leyland in 1955 after collaborating with British Leyland.
- Where is Ashok Leyland headquartered?
The company is headquartered in Chennai, India, showcasing its strong presence in the country’s automotive industry.
- What is Ashok Leyland’s market share in India?
As of 2016, Ashok Leyland holds a substantial market share of 32.1% in the commercial vehicle segment in India, solidifying its position as a key player in the market.
- What are some of Ashok Leyland’s global manufacturing facilities?
Ashok Leyland has overseas manufacturing units in locations such as Ras Al Khaimah (UAE) and Leeds (United Kingdom), enabling it to cater to international markets effectively.
- Who owns Ashok Leyland?
Ashok Leyland is currently owned by the Hinduja Group, a prominent conglomerate with diversified business interests.
- What are the key financial ratios used in the fundamental analysis of Ashok Leyland?
Some key financial ratios analysed include Gross Profit Margin, Net Profit Margin, Return on Equity (ROE), Current Ratio, Debt to Equity Ratio, Price to Earning Ratio (P/E), and Earning per Share (EPS) Growth, among others.
- How does Ashok Leyland’s profitability compare over the years?
The profitability of Ashok Leyland has experienced fluctuations, with Gross Profit Margin and Net Profit Margin showing varying trends from year to year, influenced by market dynamics and operational factors.
- What indicators are used in the technical analysis of Ashok Leyland?
Technical analysis of Ashok Leyland involves the use of indicators such as Moving Averages, Bolinger Bands, Candlestick Patterns, and Price Action to assess price movements and forecast future trends.
- What is the recommendation based on the analysis of Ashok Leyland?
Considering Ashok Leyland’s strong market position, growth potential, and favourable financial indicators, the recommendation is to buy and invest in the stock for potential long-term returns.
