Fundamental News Analysis (FNA) for 7 July 2022 - ALERT - Ashok Leyland and Sobha.
July 07, 2022 ALERT - Sobha: The company announced operational updates for Q1FY2023 which were as follows: · Sales volume rose 52% y-o-y (up 1% q-o-q) at 1.36msf. · Sales value rose 68% y-o-y (up 3% q-o-q) at Rs. 1146 crore. Sobha’s share of sales value increased 67% y-o-y (up 2% q-o-q) at Rs. 952 crore. · Average price realisation increased 11% y-o-y (up 2% q-o-q) at Rs. 8431psf, with price increases across ongoing projects. · Bengaluru sales volume & value have been highest since inception on the back of three new project launches with over 2msf of saleable area. · Cash flows remained healthy during the quarter resulting in further net debt reduction. View: The company saw continued demand across segments, particularly in Bengaluru and Gurugram. It achieved highest ever sales volume, value and price realisation during Q1FY2023. Positive for the stock. ALERT - Ashok Leyland: FY22 Annual Report Highlights - The key highlights of the annual report are as follows, · During FY22, the company posted a gradual increase in market share month over month from September 2021 in the Medium and Heavy Commercial Vehicle (MHCV) range, reaching a 30% in March 2022. It has also improved its market share in the Light Commercial Vehicle (LCV) on a year-on-year basis. The International Operations registered a 38% growth in sales volume over the last fiscal year. In addition, the businesses of Power Solutions, Defence products and Aftermarket have posted notable gains · The Chairman highlighted the supply chain disruptions, including chips are expected to continue. In the near term, the volatility in environment is likely to remain high in the near term, due to Russia-Ukraine war, which has triggered increase in the prices of oil, food and commodities. · As part of the company's commitment to clean emission vehicles, Ashok Leyland has also developed a roadmap covering CNG, LNG, hydrogen, fuel cell and battery electric vehicles to cater to different applications and customer needs. The company is working towards extending CNG and LNG variants across the full range of trucks and buses. · The company is focused on developing technologies in the areas of safety, digital, and green energy. In safety, the company is working on enabling various levels of Advanced Drive Assistance Systems and plans to roll out these products over the next three years. · During FY22, the company has structured Electrical Vehicle (EV) as a separate business for bus and LCVs under Switch Mobility and significant progress has been made in India, UK, and Spain. · Switch Mobility, looks to ramp up its engineering team to over 1,000 members from the present 300 members. The company is setting up a new facility in Warwick, the UK, mainly to tap the growing opportunities in the mobility industry. View: The company is well placed in the industry to benefit from increased economic activities related to infrastructure, mining, and e-commerce, aided by its focus on growing its market share through increased penetration across all regions and new product launches. ALL’s subsidiary, Switch Mobility Limited (SML) is likely to be a beneficiary of the electric vehicle (EV) mobility movement through its strong presence in the UK, India, and Continental Europe. We expect ALL’s profitability to improve significantly, with its EBITDA growing at a 91.6% CAGR for FY2022-FY2024E, led by a sharp improvement in operating leverage. We have a buy rating on the stock with PT of Rs 165. Sources: Sharekhan