Geojit has given Accumulate recommendation for Ashok Leyland with a target price of Rs. 127 in its research report issued on Mar 17, 2022

Geojit’s research report on Ashok Leyland

Ashok Leyland (AL) is the second-largest Commercial Vehicle (CV) manufacturer in India. It has a strong presence in the truck segment with a market share of 29% as of FY21. Q3FY22 revenue grew by 24% QoQ due to pick up in the LCV demand and strong growth registering in the M&HCV segment. However, the margin came lower on account of steep rise in raw material cost. We expect the price to show some respite at current level owing to softening commodity price. We believe the economic activities to recover gradually at current level and expect meaningful pick up in H2FY22 due to seasonality, improvement in core economic indicators and easing restrictions. AL is likely to gain market share owing to new models in ICV (Intermediate CV) & CNG trucks and LCV brand Bada Dost. Positively, AL is carrying robust capex plan in Electric vehicle under the UK Subsidiary ‘Switch’ and to use India as export hub.

Outlook

We rollover our valuation to FY24E and value AL at 11x EV/EBITDA and recommend Accumulate rating at CMP.

More Info

At 14:14 hrs Ashok Leyland was quoting at Rs 111.55, down Rs 2.90, or 2.53 percent.

It has touched an intraday high of Rs 115.60 and an intraday low of Rs 111.10.

It was trading with volumes of 1,224,365 shares, compared to its thirty day average of 1,806,434 shares, a decrease of -32.22 percent.

In the previous trading session, the share closed down 0.91 percent or Rs 1.05 at Rs 114.45.

The share touched its 52-week high Rs 153.40 and 52-week low Rs 93.20 on 16 November, 2021 and 08 March, 2022, respectively.

Currently, it is trading 27.28 percent below its 52-week high and 19.69 percent above its 52-week low.

Market capitalisation stands at Rs 32,745.81 crore.

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