Ashok Leyland Q4 Results Review: Margin Beat Aided By Improved Mix; Motilal Oswal Maintains 'Buy'

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Motilal Oswal Report

Ashok Leyland Ltd.’s Q4 PAT at Rs 12.5 billion came in ahead of our estimate of Rs 10.8 billion, aided by better-than-expected operational performance (Ebitda margin at 15% ahead of our estimate of 14.2%) and higher other income.

Over the years, Ashok Leyland has done well to reduce its business cyclicality by focusing on non-MHCV segments. Further, a net cash position would help Ashok Leyand invest in growth avenues in the coming years.

Its focus on improving margins should bode well for returns in the long run. We reiterate our Buy rating with a target price of Rs 275 (based on 11x FY27E EV/Ebitda + ~Rs 19/share for the NBFC).

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