PRESENTED BY

Himanshu Kanaujia, PGP2011650

Ishita Kishore, PGP2011657
Manish Kumar, PGP2011709
Piran Engineer, PGP2011778
Pragya Jain, PGP2011785
Shah Kunal Rajendra, PGP2011865
Sumit Malhotra, PGP2011906

We would analyse different financial ratios of

the company over last 10 years
analyse its financial performance.
We would also discuss various issues and
factors related to different ratios and their
importance.

ROE
Chart 1
3.5
3
2.5

Ratios

2
1.5
1
0.5
0
profit margin

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

0.0554110.0517890.0293170.0568030.0581620.0567510.0589550.0571450.0448920.040045

total asset turnover 1.7166161.2450821.1226762.6133812.8877542.5327222.0737642.2187011.6441581.209082

equity multiplier

1.6707611.6215851.5636721.4129871.3380191.489879 1.75386 1.47433 1.7478141.856348

ROE

0.1589220.1045610.0514670.2097550.2247320.2141460.2144250.1869270.1290060.089879

ROE = Profit Margin (Profit/Sales) * Total Asset Turnover

(Sales/Assets) * Equity Multiplier (Assets/Equity

The company is showing a mixed trend in terms of ROE.

From 2002-07 ROE is increasing except 2006.

PBIDT, PAT, INTEREST, DEPRECIATION

Chart:2
14
12
Percentages

10
8
6
4
2
0
PBIDT(%)
PAT(%)
INTEREST(%)

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

10.19

10.59

8.07

9.76

9.25

10.03

10.12

11.11

11.8

12.71

5.12

5.27

2.8

5.13

5.21

5.3

5.55

4.86

3.85

3.42

1.6621521.3750082.6288780.9616310.3939690.762691 0.71569 1.7267643.4679234.951856

DEPRICIATION(%) 2.3528972.7555512.9255122.2350252.0568632.3642492.5710692.8033393.4980254.097258

From 2002-03 PAT has decreased along with PBIDT but in

2004-05 PAT has increased even after decrease PBIDT
In 2008 PBIDT has increased but PAT has decreased due
to increase in interest percentage because of increased
loan and increased depreciation. In 2009 the company has
very high interest due to which there is a large difference
between PBIDT and PAT.

FATR, Interest Coverage, Inventory Turnover

Chart:3
Ratios

30
20
10
0
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11
Inventory Turnover Ratio

6.42

5.41

5.31

7.97

8.59

8.39

9.09

8.68

6.22

4.85

Interest Coverage Ratio

5.24

6.35

2.3

9.36

21.96

12.13

12.68

5.82

2.78

2.15

Inventory Turnover Ratio

6.42

5.41

5.31

7.97

8.59

8.39

9.09

8.68

6.22

4.85

Fixed Asset Turnover Ratio (FATR) =

Inventory Turnover Ratio =

Interest Coverage Ratio =
(EBIT)

Net Sales
Net Fixed Asset

Sales
Inventory
Earnings before interest and taxes
Interest Expense

FATR, Interest Coverage, Inventory Turnover

The fixed-asset turnover ratio measures a company's ability
to generate net sales from fixed-asset investments
In Ashok Leyland, it can be seen that the Fixed Assets
utilization has shown various deviations in the past 10 years.
Inventory turnover is the ratio of cost of goods sold to
average inventory. It is an activity / efficiency ratio and it
measures how many times per period, a business sells and
replaces its inventory again.
In case of Ashok Leyland, as far as sales are concerned
significant changes in the sales can be observed during the
past 10 years.
Interest coverage ratio relates the fixed interest charges to
the income earned by the business. It is used to determine
how easily a company can pay interest expenses on
outstanding debt
Significant high ratio has been observed only during the years
2005-2007 during which it varied from 12.68 in 2005 to as
high as 21.96 in 2007

Period
Net Sales
YOY %
Change

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

17,492.13 16,414.25 11,759.6 9,987.33 11,222.05 10,265.81 7,811.02 6,671.41 5,318.14 4,587.38 3,901.95
6.57

39.58

17.75

-11.00

9.31

31.43

17.08

25.45

15.93

17.57

Total
Expenditure 13,613.41 12,870.24 9,304.78 7,849.85 8,986.88 8,523.66 6,754.14 5,182.33 4,268.77 3,342.73 2,946.55
YOY %
Change
PBIDT/Sales
(%)

5.77

38.32

18.53

-12.65

5.43

26.20

30.33

21.40

27.70

13.45

10.19

10.59

8.07

9.76

9.25

10.03

10.12

11.11

11.8

12.71

As can be seen in the recent years PBDIT/sales has shown an

increase over the past two years after a sharp dip. The sharp
dip can be attributed to the recession, particularly during the
year 2008. The increase is effected due to the greater
increase in net sales over the past year than the increase in
expenditures. This is an indicator of the fact that operational
efficiency has picked up again.

Period
2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Loan Funds 45,145.53 43,296.84 34,750.2 27,842.55 21,669.93 19,324.04 16,796.12 14,864.18 14,245.40 11,323.97 11,992.3
YOY %
Change
Total
Liabilities
YOY %
Change
Sales
YOY %
Change

4.27

24.59

24.81

28.48

12.14

15.05

13.00

4.34

25.80

-5.57

56,300.73 52,806.84 42,385.7 34,609.60 28,298.76 23,454.80 20,705.41 18,270.07 17,239.16 14,426.27 15,199.2
6.62

24.59

22.47

22.30

20.65

13.28

13.33

5.98

19.50

-5.09

18,675.88 17,544.51 12,509.7 10,812.45 12,585.80 11,573.99 8,769.08 7,407.19 5,943.35 5,032.52 4,328.51
6.45

40.25

15.70

-14.09

8.74

31.99

18.39

24.63

18.10

16.26

Here the sales upon net assets ratio peaks in 2008. After
2008 the ratio decreases even though the sales have
increased due to the fact that the company has taken huge
loans. The loans may have been taken for the sake of capacity
expansion.

Price-Earnings Ratio(P/E Ratio)

Period

P/E Ratio

March 2011
March 2010
March 2009
March 2008
March 2007
March 2006
March 2005
March 2004
March 2003
March 2002

12.87
19.00
14.37
10.80
12.32
16.10
9.81
16.55
10.30
10.32

Percentage change
-32.26
32.22
33.06
-12.34
-23.48
64.12
-40.73
60.68
-0.20
-

Table:P/E Ratio of Ashok Leyland for the past 10 years.

A high P/E suggests that investors are expecting higher

earnings growth in the future compared to companies with
a lower P/E
In case of Ashok Leyland, some years have been particularly
good when P/E ratio has shown a major increase of up to
64.12% (in 2006)

Price to Book Value Ratio(P/BV Ratio)

Period
March 2011
March 2010
March 2009
March 2008
March 2007
March 2006
March 2005
March 2004
March 2003
March 2002

P/BV Ratio
2.85
3.18
1.14
2.21
2.72
3.54
2.19
2.94
1.24
0.94

Percentage change
-10.38
178.95
-48.42
-18.75
-23.16
61.64
-25.51
137.10
31.91
-

Table:P/BV Ratio of Ashok Leyland for the past 10 years.

A high P/BV indicates vice versa that markets believe the

company's assets to be undervalued or that the company is
earning and is expected to earn in the future a high return on
its assets.
In case of Ashok Leylands P/BV ratio it has been quite static
others than times when it touched almost to a value of 3.54

Period
March 2011
March 2010
March 2009
March 2008
March 2007
March 2006
March 2005
March 2004
March 2003
March 2002

Price/Cash EPS (P/CEPS)

P/CEPS Ratio
8.85
12.49
6.96
7.66
9.03
11.41
6.87
10.83
5.38
5.08

Percentage change
-29.14
79.45
-9.14
-15.17
-20.86
66.08
-36.57
101.30
5.91

Table:P/CEPS Ratio of Ashok Leyland for the past 10 years.

Cash EPS differs from basic earnings per share (EPS),

The higher a company's cash EPS, the better it is
considered to have performed over the period.
Currently the ratio has decreased in the last one year
period.
Due to decrease in the market price of the share rather
than the increase in Cash EPS indicating that the
shareholders were not expecting the company to perform
the way it did in the 2009-10 period.

EV/EBIDTA Ratio
Period

EV/EBIDTA Ratio

Percentage change

March 2011

7.99

-26.0185

March 2010

10.8

38.10742

March 2009

7.82

36

March 2008

5.75

-14.9408

March 2007

6.76

-16.44

March 2006

8.09

54.98084

March 2005

5.22

-27.6006

March 2004

7.21

60.57906

March 2003

4.49

-1.75055

March 2002

4.57

Table: EV / EBIDTA Ratio of Ashok Leyland for the past 10 years.

P/E ratios are impacted by a company's choice

of capital structure companies which raise money via
debt will have lower P/Es (and therefore look cheaper)
than companies that raise an equivalent amount of
money by issuing shares
It is difficult to use P/E ratios to compare different

Market Cap to Sales Ratio

Period

Market Cap/Sales Ratio

Percentage change

March 2011

0.61

-33.6957

March 2010

0.92

-61.9565

March 2009

0.35

45.71429

March 2008

0.51

17.64706

March 2007

0.60

33.33333

March 2006

0.80

-36.25

March 2005

0.51

49.01961

March 2004

0.76

-51.3158

March 2003

0.37

-5.40541

March 2002

0.35

--

Table: Market Cap/Sales Ratio of Ashok Leyland for the past 10 years.

The Market Cap to Sales ratio, also referred as the Price to

Sales ratio
This is an important point for small investors to note. Many
say that they have limited capital and therefore, opt to buy
shares that are cheaper in price. They end up buying a small
cap or mid cap share.
Ashok Leyland currently has a value of 0.61 of Market Cap/
Sales ratio. It could be undervalued

Economic Value Added

EVA is one of the most recent and important methods to judge
the performance of a company.
It is an internal management performance measure that
compares net operating profit to total cost of capital
EVA = NOPAT (c x WACC)
Where NOPAT: Net operating profit after tax = EBIT x (1-tax rate)
C: Capital employed
WACC: Weighted average cost of capital
Economic Value Added is calculated for FY11 as follows:
NOPAT = 760.15
WACC= 15.91%
C= 2701.28
Therefore, we get EVA = 330.42 crore

THANK YOU