India's second largest commercial vehicle maker Ashok
Leyland missed street estimates on
Tuesday with a net profit of Rs 67 crore, down 22% year-on-year due to rising
costs and higher spends on advertising and promotion.
Its quarterly revenue rose 20% to Rs 3,007 crore, helped by
strong sales growth, especially of its small commercial vehicle Dost, which is
made in partnership with Japan's Nissan.
Analysts on an average had expected Ashok Leyland to report
net profit of Rs 84 crore on net sales at Rs 3,036 crore, according to a
CNBC-TV18 poll.
While LCV sales have been strong, most CV makers have seen
slow growth in the heavy truck segment, as fleet operators have postponed
purchases amid slowing economy.
The Hinduja Group company had sold 27,487 units in
April-June quarter, up 43% from a year ago. While domestic sales rose 3.5% to
17,335 units, exports were up 14% to 2,904 units.
"Even while the total industry volume in India dipped
by 12%, we were able to increase our market share by 3.8%. Dost did very well,
achieving 21% market share in the first 9 months of sales," said Vinod
Dasari, MD.
The company's profit was, however, impacted by higher
expenses. Employee costs were up 7% to Rs 268 crore, depreciation rose 5% to Rs
89 crore and other expenses jumped 50% to Rs 310 crore due to higher sales
overheads.
More over, the company's aggressive advertising and
marketing push also hurt bottomline.
"Our profits have taken a hit largely because of the
robust brand building and marketing initiatives that we kicked off during the
quarter including the signing on of Mahendra Singh Dhoni as our brand
ambassador. In addition, we were also hit by spiraling power costs,"
Dasari said.
The market outlook remains tepid but the company is
cautiously optimistic of the coming months.
"We will focus on introducing a slew of new products
that the market is waiting for, keep building our network and continue our
brand building efforts to maintain and improve our market share," he said.
Ashok Leyland shares ended down 2.1% at Rs 23.30 on NSE on
Tuesday.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
