The stock of Ashok Leyland dropped by about 5 per cent so far in trading today, possibly on profit booking. The cyclical upturn in a truck and bus sales and the consequent turnaround from losses by the company has helped the stock double in the last one year. The company continued to deliver strong results in the latest September quarter as well.

The company’s net sales grew by 55 per cent to Rs 4,879 crore in the quarter ended September 2015. Top-line growth was supported by strong volume growth of 64 per cent in the medium and heavy commercial vehicles segment. Besides, higher operating leverage along with softer raw material costs helped margins expand to 12 per cent in the September quarter, from 7 per cent a year ago. This, along with lower finance costs helped net profits (adjusted) zoom from Rs 41 crore in the September 2014 quarter to Rs 290 crore now.

With the company having returned to profitability from the September 2014 quarter onwards, a high base might see top and bottom line growth moderate in the coming quarters. The stock seems to have captured the upside, trading at a high valuation of 35 times its trailing twelve month earnings.

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