Ashok Leyland Ltd.

Ashok Leyland Ltd— BUY—52—INR
Sector — Automobiles
Regd.Off.— Gateway Building, Apollo Bunder, Mumbai, M.H., 400001
Listed — NSE, BSE.
Company Overview—
Company was incorporated on 7th September 1948 at Chennai. In 1948, company was set up for the assembly of Austin Cars. British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH) was taken over by a joint venture between the Hinduja Group, the Non-Resident Indian transnational group and IVECO. (Since July 2006, the Hinduja Group is 100% holder of LRLIH). In the journey towards global standards of quality, Ashok Leyland reached a major milestone in 1993 when it became the first in India's automobile history to win the ISO 9002 certification. The more comprehensive ISO 9001 certification came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle manufacturing units in 2002. It has also become the first Indian auto company to receive the latest ISO/TS 16949 Corporate Certification (in July 2006) which is specific to the auto industry. In collaboration with Leyland Vehicles, Ltd., the Company embarked on a program of manufacture of integral buses. A technical collaboration agreement was entered into for the manufacture of synchromesh transmissions to the designs of Azhnradfabrik Friedrichschafen AG of West Germany. Company entered into an agreement for a joint venture in Sri Lanka for the assembly and progressive manufacture of Ashok-Leyland vehicles. In 1998, company introduced "The Panther", a low floor bus, which has been indigenously designed to cater to the needs of the common masses and is based on the parameters set by the Central Institute of Road Transport and the Association of State Road Transport Undertakings. The ministry of defense’s vehicle factory in Jabalpur has manufacturing agreements with Ashok Leyland. Company supplied buses to Afghanistan as a part of Indian Government's Assistance to the war-ravaged Afghanistan. In 2003 it got $46 million truck supply contract from the United Nations also. Company has collaboration agreement with ZF of Germany for local manufacturing of ZF's 9-speed synchromesh gearbox. Company has BS7799 certification for information security management system. Company has a joint venture (JV) with the US-based agriculture equipment maker John Deere for manufacturing and marketing construction equipment. The joint venture will initially manufacture backhoes and wheel loaders and will market these in India and abroad. The range will subsequently be expanded to include a full line of construction equipments.
Products & Services—
Company is working from last 6 decades as an Indian transport solution company. Company’s product portfolio includes buses, trucks, special application vehicles and engines. In buses, company has different brands like Viking BS-I, Viking BS-II, 12 M bus, Cheetah BS- I, Panther Luxury, Cheetah BS- II, Stag BS-II, Vestibule Bus, Airport Tarmac Coach, 222 CNG Bus, Lynx, Double Decker etc. In Trucks, it has 4 X 2 Haulage models, 4 X 2 multixled Tippers, Multiaxle Vehicles, Tractors and Ecomet etc and some other loading models for construction and mining sector. Except this, Company is the reputed supplier of defense vehicles for Indian army. Company has long been in the manufacture of defense and specialty vehicles. In special vehicles it has Rapid Intervention vehicle 4 X 4, Hippo Tractor, Beaver Tractor, Beaver Haulage, Hippo Haulage, Stallion MK III Tipper, Hippo Tipper etc.
From 18 to 82 sit double-decker buses, from 7.5 tonne to 49 tonne in haulage vehicles, from numerous special application vehicles to diesel engines for industrial, marine and genset applications, Ashok Leyland offers a wide range of products. Ashok Leyland vehicles have built a reputation for reliability and ruggedness. The 5,00,000 vehicles company have put on the roads have considerably eased the additional pressure placed on road transportation in independent India. In the populous Indian metros, four out of the five State Transport Undertaking (STU) buses come from Ashok Leyland. Some of them like the double-decker and vestibule buses are unique models from Ashok Leyland, tailor-made for high-density routes.
Valuation—
At current market price, stock is trading at 12.5 P/E multiple of its FY2010 Estimated earnings. We recommend investors to buy “Ashok Leyland” with long term investment horizon.