Ashok Leyland advanced further on Thursday on good buying support, especially from institutions.

By 14:35 IST, the scrip of the truck maker from the Hinduja Group rose by 5.41 % to Rs 112 on the BSE, recording a volume of close to 150,000 shares. In the last two sessions, the scrip rose by 11%, from 101 on 13 May 2003.

Dealers said that stocks of Ashok Leyand and Tata Engineering & Locomotive Company, the two major commercial vehicle manufacturers, attracted buying support from institutions. As per market buzz, DSP Merrill Lynch was active on the ALL counter on Thursday, while Refco-Sify acquired the stock yesterday.

They said that institutions are bullish on the growth prospects of ALL and Telco. Also, there were hopes that ALL's sales figures will be impressive for the current month following the rise in demand for commercial vehicles in southern India. The demand is also expected to rise following the recent trucker's strike, which hit sales in April 2003.

Meanwhile, Chennai-based ALL announced a 27.4% decline in sales in April 2003 at 1,622 units over 2,236 units in the year-ago month. While domestic sales plunged by 28.1% to 1,542 units, exports slipped by 12% to 80 units for the month. The April 2003 sales were also lower by 69.3%, compared to 5,293 vehicles sold in March this year.

Meanwhile, the hopes of a normal monsoon this year has also generated interest in the ALL stock, as it will indirectly boost the demand for the company's vehicles. Also, ALL is expected to benefit from the Centre's thrust on road projects. The buoyancy in the replacement market is also likely to help the company. The Golden Quadrangle project has picked up momentum in the southern region, which is expected to further increase the demand for ALL's commercial vehicles.

Meanwhile, other auto stocks that posted gains were Telco (up 1.96% to Rs 158.60), Eicher (up 4.38% to Rs 32.20), Eicher Motors (up 2.02% to Rs 101), Bajaj Tempo (up 1% to Rs 107) and Swaraj Mazda (up 4.40% to Rs 95).

For Q4 ended 31 March 2003, ALL reported a 4.7% fall in net profit to Rs 66.34 crore, compared to a net profit of Rs 69.62 crore in the corresponding period of the previous year. Net sales were at Rs 932.35 crore (Rs 9.32 billion). These figures belied capitalmarket.com projections - a 9%-17.5% growth in net profit to Rs 76-82 crore. Net sales were on the lower side of expectations - a 19%-31.6% growth at Rs 913-1,011 crore (Rs 9.13-10.11 billion).

For FY 2002-03, ALL posted a 30.3% increase in net profit to Rs 120.21 crore (Rs 1.2 billion) on a 19% jump in total income to Rs 2,713.95 crore (Rs 27.13 billion). The company's board declared a dividend of 50%, or Rs 5 per share, for FY 2003.

For FY 2002-03, ALL recorded an impressive growth in volumes. Its sales went up by 22.8% to 36,445 vehicles, from 29,673 units a year ago. The company recorded a 23.2% rise in domestic vehicle sales to 33,895 units, while exports jumped by 17.5% to 2,550 units. The surge in sales of heavy commercial vehicles was due to the shift in demand towards multi-axle vehicles. ALL is also a leading supplier of buses to State Government undertakings.

Meanwhile, ALL has bagged a $46-million order for supplying 3,322 trucks to Iraq, under the UN-approved Oil for Food Programme. Repeat orders have also manifested from Seychelles and Afghanistan – two markets tapped by the company in the last financial year.

The Hinduja group company has framed a strong export strategy and is exploring new markets in Argentina, Afghanistan and Seychelles.

ALL has proposed a reduction of up to 1,000 jobs, expected to be undertaken over 4-5 years. It may be recalled that the company had reduced its manpower strength from 15,300 six to seven years ago, to 11,900 currently. ALL also plans to improve productivity through better processes and standardisation.

As on 31 March 2003, promoters held 50.93% equity stake in ALL, while public and institutions held 8.18% and 34.47% respectively.

BSE code: 500477