Icra optimistic on Ashok Leyland this year; revises rating to stable

Around 80% of the company's revenue is from the cyclical CV segment

Ratings agency Icra has revised upwards its long-term assessment for commercial vehicle (CV) maker Ashok Leyland. The rating was revised from AA (positive) to AA+(Stable), while the short-term rating was reaffirmed at A1-Plus. Icra pointed to sustained improvement in Leyland’s credit profile in the three-year period ending 2018-19. The rationale included strong volume growth in medium and heavy CVs (M&HCV), with 10 per cent compound annual growth in those three years, stable market share at 34 per cent, improving profitability and scale economies, increasing skew towards higher tonnage vehicles, various cost control initiatives, healthy liquidity and robust debt protection metrics,