Ashok Leyland shares down by 8%, after MD & CEO Vinod K Dasari quits

Ashok Leyland shares declined by eight per cent after the resignation of the company's Managing Director and CEO Vinod K Dasari. He had joined Ashok Leyland as Chief Operating Officer (COO) fourteen years ago and took over as the MD seven years back.

Company's share was trading at Rs 110.25 a share, down by Rs 8.80 or 7.39 per cent on Wednesday morning.

On Tuesday Dasari announced his decision to quit as Managing Director and Chief Executive Officer of Ashok Leyland after nearly 14 years in the company. He has decided to pursue his personal interests.

In the interim, the company’s Chairman Dheeraj Hinduja will oversee the responsibilities as Executive Chairman.

Dasari will be the first MD to quit Ashok Leyland, while all his predecessors retired. “I have been thinking about this for some time; I have decided to pursue my personal interests,” he said.

CLSA LTD's report stated good growth of the company, but gross margins slipped in second quarter on commercial vehocles (CV) demand with industry already in the late part of upcycle.

Nomura report stated EBITDA lower than estimates on weak product mix and higher discounting pressures.

Moreover, the resignation of Vinod Dasari may cause some short-term concerns, said the research agency.

Speaking to analysts, Hinduja said there could be some challenges over the next six months as elections are approaching, but beyond that, the firm is well positioned to grow for the next five years.

“Our growth momentum will continue; there is no change in the vision or strategy,” said Hinduja, adding that succession will be smooth.

Company has posted a net profit of Rs 4.59 billion as compared to Rs 3.34 billion same quarter last year. The total income has seen a growth of 24.5 per cent at Rs 76.36 billion during the quarter as against Rs 61.32 billion during the same quarter last year.

The company achieved an EBITDA margin of 10.6 per cent as against 10.1 per cent in the same period last year. Despite market volatility, it has posted consistent operating margins with double-digit EBITDA margins in 14 of the past 15 quarters, claims the company.

"In a challenging market scenario and an aggressive competitive environment, we have registered a record financial performance. After bringing the world's first BS4 engine with intelligent EGR, we continued to provide innovative world-class products like the world's first inline pump based 854 engine.

Gopal Mahadevan, CFO, Ashok Leyland added, "The growth in top line has helped in our financial performance. While input cost increases continue, we are attempting to neutralize this effect through effective cost management. We continue to be zero debt as at the end of the quarter".