CARE revises credit rating of Ashok Leyland a notch down

CARE revises the credit rating of Ashok Leyland a notch down from CARE AA+; negative (double A plus; Outlook: negative) to CARE AA; negative (double A; Outlook: negative).

The revision in rating assigned to the bank facilities and various debt instruments of Ashok Leyland Ltd led to the increased level of uncertainty associated with recovery & demand growth in the commercial vehicle (CV) industry in FY21 (from April 1,2020 to March 31,2021) in the backdrop of Coronavirus pandemic-led economic slowdown and its resultant impact on the financial performance of the company in FY21.

Earlier, CARE had revised the rating outlook assigned to the bank facilities and instruments of the company on March 24, 2020 from ‘stable’ to ‘negative’. The revision in the negative outlook was on account of unfavourable CV industry scenario and muted growth expected in Q4FY20 and Q1FY21. Soon after this, the nationwide lockdown was announced by Government of India and was extended till May 3, 2020. The unprecedented lockdown is expected to adversely impact the economic growth rate. Amid the stressed ecosystem, a recovery in demand for CV industry could take longer than expected thereby, resulting in profit moderation. However, Ashok Leyland’s liquidity remains comfortable with cash and liquid investments of Rs 1,279 crore as on March 31, 2020 and relatively, low debt obligations in the near-term.

The stock closed at 46.15, down by 3.05 per cent or Rs 1.45 per share. The intraday high is Rs 48.95 and intraday low is Rs 45.80. The 52-week high is Rs 94.90 and 52-week low is Rs 33.70 on BSE.