Ashok Leyland Q1 Results Review - Near Term Positives Factored In, Maintain 'Reduce': Dolat Capital

Dolat Capital Report

Ashok Leyland Ltd. printed strong margin in Q1, despite low volume, Ebitda margin at 10% led by sharp expansion in gross margin. Management is confident to maintain double digit margin for FY24.

The company is gaining strong market share in medium and heavy commercial vehicle segment led by market share gain in Northern and Eastern geography.

In light commercial vehicles segment, the company has aggressive plan underway in Northern and Eastern market.

While we remain positive on Ashok Leyland’s improving fundamentals, we believe that valuations at 22/19 times for FY24/25E earnings per share appear fully priced at the almost top of commercial vehicle cycle.

We maintain 'Reduce' with target price Rs 186 (based on 20 times FY25E EPS).

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