Why Ashok Leyland, Bharat Forge stocks fell to fresh 52-week lows in early trade today
The Ashok Leyland and Bharat Forge stocks hit fresh 52-week lows in trade today on tepid commercial vehicle and truck sales. While stock of axle maker Bharat Forge fell to 512 or 3.75% intra day, the Ashok Leyland stock hit a fresh low of 101.20 on the BSE. The Bharat Forge stock has been losing for the last two days and has fallen 11.75% in the period. The large cap stock has lost 26.07% during the last one year and fallen 29.65% since the beginning of this year.
On the other hand, the Ashok Leyland stock fell 2.36% intra day in trade today after losing 5.13% during the last two days. The large cap stock has lost 11.13% during the last one year and fallen 14.63% since the beginning of this year.
Hinduja flagship firm Ashok Leyland logged a 9 per cent decline in total commercial vehicle sales at 13,121 units in November compared to 14,457 units in the same month last year.
Medium and heavy commercial vehicle sales fell 18 per cent to 8,718 units last month compared with 10,638 units in November 2017. Light commercial vehicle sales were, however, higher by 15 per cent at 4,403 units as against 3,819 units in the corresponding month last year.
Similarly, Bharat Forge stock fell after sales of heavy trucks in the US plunged to a 14-month low in November.
The firm logged a 36% sequential and 15% year-on-year plunge in November sales of North America Class 8 trucks. Sales of North America Class 8 trucks fell to 27,900 units in November 2018, the lowest level since September 2017. The sales stood at 32,293 units in November 2017 and 43,000 in October 2018, logging a decline of 14% year-on-year and 35% month-on-month .
However, the company has given a guidance of 28% volume growth in the heavy trucks segment in 2018 calender year. The firm also expects to deliver strong sales in 2019 calender year.
In Q2 of the current fiscal, revenue from exports to North America rose 39% year-on-year and that to Europe by 32%.
The conditions in the domestic market haven't been encouraging either.
Home-grown auto major Tata Motors reported a 3.8 per cent fall in domestic sales to 50,470 units in November as compared to 52,464 in November last year. This was "due to low consumer sentiments as a result of liquidity crisis in the industry, higher interest rates and rising fuel costs," the company said.
Tata Motors' Commercial Vehicles (CV) domestic sales fell 5.15 per cent in November to 33,488 units compared to 35,307 sold last November.
A Kotak report described the performance of the domestic truck industry in November.
"Overall, demand in medium and heavy commercial vehicle (MHCV) industry fell in November 2018 led by funding constraints due to NBFC liquidity issues. Strong demand from the construction segment is aiding industry growth and freight operator profitability is strong. Hence, the decline in November could be on account of financing issues in the commercial vehicles segment. In terms of original equipment manufacturers, (1) Tata reported a 24% yoy decline in domestic truck volumes while light commercial vehicle segment reported 8% yoy growth and (2) Ashok Leyland reported 18% yoy growth in overall MHCV volumes, largely led by a sharp decline in exports while domestic truck sales likely declined in mid-single digits," the report said.
Edited by Aseem Thapliyal