Ashok Leyland hits a bump

Ashok Leyland ended Q1FY21 with a consolidated net loss of Rs.389 crore v/s profit of Rs.275 crore (YoY).  The loss saga began right at the topline, which dropped by a huge 77% at Rs.1486 crore. A deferred tax write back of Rs.157 crore helped shore up the loss or else it would have been higher.

Though the total expenses came down 67% but as a percentage of total income it was at 134% while in Q1FY20, it was at 93%. Thus lower sales and higher expenses did it in.

The company has blamed it all on the lockdown on account of the pandemic as April and part of May saw no activity. The company says that with virtually no operations or revenues in the first part of this quarter owing to the lock down, the demand is seen to be gradually opening up as the lock down is being eased.

The market is looking ahead of this loss, having already discounted it. The stock, though opened lower by 2.3% at Rs.52.70, it spurted up from there on value buying, rising almost 5.5% to Rs.56.85 and continues to currently trade at Rs.56 levels.