ICICI Direct has given Buy recommendation for Ashok Leyland with a target price of Rs. 150 in its research report issued on Feb 12, 2021

ICICI Direct’s research report on Ashok Leyland

Ashok Leyland (ALL) reported a muted operational performance in Q3FY21. Revenues came in at Rs 4,814 crore (up 19.9% YoY), with ASPs down 1.2% QoQ at Rs 14.4 lakh/unit despite substantial product mix improvement in favour of M&HCV (~50% of total volumes vs. ~41% in previous quarter). Total volumes were at ~33,400 units, up ~7% YoY. EBITDA margins were at 5.3% amid savings realised in other expenses. Consequent reported loss after tax was at Rs 19 crore, impacted by an exceptional charge that also includes one-time VRS cost amounting to Rs 85 crore.


We maintain BUY, valuing it at Rs 150 on SOTP basis, assigning 15x EV/EBITDA to CV business on FY23E numbers and 1.5x P/B for investments (previous target price at Rs 120).