Ashok Leyland Ltd shares rose about 8% in the first trades on the National Stock Exchange. Investors are visibly delighted with the company’s March quarter results announced Thursday night.

The margin performance has been encouraging, analysts said. In the March quarter, Ashok Leyland’s profit margin before interest, taxes, depreciation and amortization (EBITDA) increased by approximately 240 basis points to 7.6% from the December quarter. A basis point is one hundredth of a percentage point. This was helped by the benefits of operating leverage.

Commenting on the results, analysts at Jefferies India Pvt. Ltd said in its first cut note, “Ashok Leyland’s March quarter volumes increased 32% quarter-over-quarter while EBITDA increased 110% quarter-over-quarter. ‘other – 18% above Jefferies’ estimate. lower than expected personnel costs, which were down 12% quarter on quarter despite rising volumes. “Labor costs were down approximately 12% sequentially.

In contrast, average selling prices increased 10% sequentially. However, this was not enough to protect the gross margin as such, which contracted 250 basis points from the December quarter. This has led to gross profit per vehicle remaining stable quarter over quarter, analysts at Jefferies said.

Overall, revenue increased 45% sequentially to Rs7000 crore. “Sequentially, during Q3FY21, MHCV truck volumes for Ashok Leyland increased by 57% to T4FY21, which was higher than the industry growth of 53%, resulting in a market share improvement of 0.8 % (28.9% in Q4 vs. 28.1% in Q3), ”the company said in its press release. MHCV refers to medium and heavy commercial vehicles. “This performance was supported by the success of the AVTR range – the first modular truck platform in India which was launched in June 2020,” the company said.

Certainly, the second wave of covid poses short-term challenges for Ashok Leyland.

Meanwhile, Ashok Leyland shares significantly outperformed the broader Nifty 100 index. “The stock is trading at FY23E 9.7 times EV / Ebitda and 3.8 times the price over book value.” , analysts at Motilal Oswal Financial Services Ltd said in a report released on June 24. EV is the abbreviation for enterprise value. operating cash flow decreased to Rs 21.1 crore (from Rs 940 crore) mainly due to the impact of the near collapse in 1HFY21 and an increase in working capital of around 430 crore of Rs. “

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