Kapil
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Ashok Leyland and Nissan Motor to form three joint venture companies

Kapil at 02:28 PM - Sep 01, 2007 ( )

  • Ashok Leyland and Nissan Motor Company, Japan have agreed to form three joint venture companies in India to develop, manufacture and market light commercial vehicle (LCV) products. 
  • Both companies are also examining ways to tap each other's dealer networks in India and elsewhere. A final agreement would be signed after the feasibility study concludes by October 2007.
  • The tie up should aid Ashok Leyland to expand its product offerings and introduce products in the sub-6 tonne category, where it currently lacks presence. However, the setting up of the plant would take at least 18-24 months and hence the first roll out of the new products is expected only in FY2010.
  • The commercial vehicle segment is currently witnessing a slowdown, which is impacting Ashok Leyland as well. We continue to watch keenly the commercial vehicle segment in India to determine any signs of revival. We expect things to improve in the second half of the fiscal with the advent of the festive season.
  • For FY2008 we expect the company to report a sales volume growth of 3.2%.
  • At current levels, the stock discounts its FY2009E earnings by 9.7x and is available at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 6.2x. We maintain our Hold on the stock.


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