The stock has recovered twice after it fell below the Rs 115-level from the Rs 120-level over the past few sessions. The stock currently trades near its 52-week high. It has witnessed a sustained rally on the bourses over the past few months. It surged 49.3% from Rs 81.35 on 15 November 2002 to the current Rs 121.50.

The recent firm trend in Ashok Leyland (ALL) is also part of the broad-based surge in auto shares in the last few trading sessions. A host of auto scrips belonging to the two-wheeler, tractor and commercial vehicles sector have surged over the last few trading sessions following the arrival of the monsoon and on expectations that the monsoon this year will be normal. Stocks like Hero Honda, Bajaj Auto, Telco, Eicher Motors, Punjab Tractors and Mahindra & Mahindra have witnessed a rally in the last few trading sessions.

Analysts have a positive view on ALL due to its strong volumes growth in M&HCVs and its strategy to cash in on the new Hino engines for M&HCVs (which offer the advantage of high fuel efficiency and low maintainence). The company's cost cutting drive has led to a firm trend on the ALL counter as well.

ALL reported a surge in vehicle sales for the month of May 2003. It reported an 18.45% growth in volumes to Rs 2,914 units in May 2003 as against 2,460 vehicles sold in the corresponding period last year. Of this, domestic sales leaped by 20% to 2,726 units, with medium duty goods vehicles recording a 26.5% growth at 1,943 units. However, exports were one unit short of 189 vehicles shipped in May 2002. The May 2003 sales were higher by 79.3% compared to 1,625 units sold in the previous month. ALL's vehicle sales during April-May 2003 were however, lower by 3.3% at 4,540 units. The company's multi-axled vehicles, tractors and tippers continue to enjoy good demand.

For the year ended 31 March 2003, ALL registered a 30% growth in net profit to Rs 120.21 crore on a 19% growth in top line to Rs 2698.66 crore. The bottom line growth was aided to a large extent by the compression of interest expenses. Interest costs dropped by 29% to Rs 58.51 crore in FY 2002-03 from Rs 82.81 crore in the previous year. The fall in interest cost was due to the conscious strategy to reduce debts. ALL reduced its overall debt by about Rs 125 crore in FY 2002-03.

ALL's product strategy is to leverage the Hino Engine fully in FY2003-04. Going forward, ALL has decided that it will be using the H series for its entire M & HCV range which also includes multi axle vehicles in the 20 to 40 tonnes category. Analysts feel that ALL would be able to capture higher market share on the back of the Hino engine-powered vehicles.

Analysts expect ALL to achieve strong volumes growth in the M&HCV segment also, on the back of the potential of the replacement market and the increased focus on infrastructure projects which are expected to drive demand for commercial vehicles.

ALL intends to launch its new Ecomet series some time by the end of Q1 of FY 2003-04. The Ecomet Range will basically cover the 7,9 and 11 tonnes segments where ALL was not well represented earlier. ALL intends to bag a market share of 20% plus in this segment over the next 2-3 years.

Meanwhile, ALL has also bagged a $ 46-million order to supply 3,322 trucks to Iraq under the UN approved Oil for Food program. This order will be concluded in FY 2003-04.