Jefferies cuts Ashok Leyland to 'underperform'

Tue Jan 22, 2013 2:54pm IST

Ashok Leyland Ltd Light Specialist (R) and Field Artillery Tractor vehicles are displayed at the fifth Land and Naval Systems Defence Expo 2008 in New Delhi February 18, 2008. REUTERS/B Mathur/Files

Ashok Leyland Ltd Light Specialist (R) and Field Artillery Tractor vehicles are displayed at the fifth Land and Naval Systems Defence Expo 2008 in New Delhi February 18, 2008.

Credit: Reuters/B Mathur/Files

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Reuters Market Eye - Jefferies downgrades Ashok Leyland, India's second-biggest bus and truck maker, to "underperform" from "buy" and cuts its target price to 21.8 rupees from 30.2 rupees.

The brokerage says truck demand "continues to deteriorate", while demand from Southern India, a critical market for Ashok Leyland, hasn't recovered "to the extent expected."

Jefferies also cites Ashok Leyland's "stretched" balance sheet and "weak" cash flows.

The downgrade comes ahead of the company's October-December earnings on Thursday.

Shares in Ashok Leyland are down 2.7 percent at 26 rupees as of 2:52 p.m.

(Reporting by Abhishek Vishnoi)

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