ANALYSIS OF DIVIDEND POLICY OF ASHOK LEYLAND

Submitted By- Lakshmi K. 73/09(F) Section-C

Ashok Leyland- An Overview

Commercial vehicle manufacturing company based in Chennai, India. Founded in 1948,it is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle segment. The joint venture announced with Nissan Motors of Japan would improve its presence in the Light Commercial Vehicle segment.

ASHOK LEYLAND
KEY COMPETITORS TATA MOTORS EICHER MOTORS SWARAJ MAZDA

ASHOK LEYLAND

A
Earnings per share Dividend per share Dividend payout (%) Price
P/E

2009 1.43 1.00

100

2008 3.53 1.50

150

2007 3.38 1.50

150

2006 2.74 1.20

120

2005 2.28 1.00

100

36.65 25.70

32.95 9.33

35.60 10.53

37.55 13.70

28.40 12.46

ASHOK LEYLAND
2004
Earnings per share Dividend per share Dividend payout (%) Price
P/E

2003
1.01 0.50 50

2002
0.78 0.45 45

2001
0.77 0.40 40

2000
0.66 0.35 35

1.63 0.75 75

18.30 11.22

16.41 16.25

10.04 12.88

6.02 7.82

4.39 6.65

EARNING PER SHARE OVER THE YEARS (Rs)

EARNINGS PER SHARE

EARNINGS PER SHARE

4 3.5 3 2.5 2 1.5 1 0.5 0

EARNINGS PER SHARE

2000

2001

2002

2003

2004

2005

2006

2007

2008

YEARS

2009

DIVIDEND PAY OUT RATIO OVER THE YEARS (%)

DIVIDEND PAY OUT RATIO

DIVIDEND PAY OUT RATIO

160 140 120 100 80 60 40 20 0

DIVIDEND PAY OUT RATIO

2000

2001

2002

2003

2004

2005

2006

2007

2008

YEARS

2009

DIVIDEND PER SHARE OVER THE YEARS

DIVIDEND PER SHARE

DIVIDEND PER SHARE

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

DIVIDEND PER SHARE

20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09
YEARS

MARKET PRICE OVER THE YEARS

MARKET PRICE 40 35 30 25 20 15 10 5 0

PRICE

MARKET PRICE

20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08
YEARS

COMPARISON WITH COMPETITORS (EARNINGS PER SHARE)

c ASHOK LEYLAND TATA MOTORS EICHER MOTORS SWARAJ MAZDA 2005 2006 2.28 2.74 2007 3.38 2008 3.53 2009 1.43

34.1 9 20.9 5 23.1 0

39.93
77.21 15.98

49.65
21.81 15.32

22.45 24.00

19.48
14.34 4.56

100 90 80 70 60 50 40 30 20 10 0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

East West North

COMPARISON WITH COMPETITORS (DIVIDEND PAY OUT RATIO (%))

2005 2006 ASHOK LEYLAND TATA MOTORS EICHER MOTORS SWARAJ MAZDA 100 120 2007 150 2008 150 2009 100

125
40 75

130
40 55

150
290 55

150
50 55

60
50 15

Comparison of Dividend Payout Ratios of Peers

350 300 250 200 150 100 50 0 2005 2007 2009 ASHOK LEYLAND TATA MOTORS EICHER MOTORS SWARAJ MAZDA

KEY FINDINGS
The EPS of the company has witnessed a growth over the years except the current year. The dividend pay out pattern has been pretty stable over the years. The market price of share has increased over the years CURRENT SCENARIO The current price is 36.70 and P/E ratio is 33.06. Earnings per share has declined at 59% since last year.