Ashok Leyland Q3 Results Review - Margin Expansion Led By Raw Material Cost Savings: Motilal Oswal

Motilal Oswal Report

Ashok Leyland Ltd.'s Q3 FY24 results was a beat, led by savings in raw materiaL costs, which led to Ebitda margins expanding 320 basis points YoY to 12% (versus estimates10.5%). While volume growth is expected to remain moderate, the focus on profitable growth should aid overall margins.

We cut FY24E/FY25E earning per share estimates by 6% each to factor in demand moderation in domestic medium and heavy commercial vehicles volumes.

We reiterate our 'Buy' rating with a target price of Rs 205 (based on 10 times March- 26E electric vehicle/Ebitda plus ~Rs 17/share for the non-banking financial company).

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