Ashok Leyland's Plan To Shutdown UK's Switch Mobility Switches Focus To India, Says ICICI Securities

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ICICI Securities Report

Ashok Leyland Ltd. is considering ceasing manufacturing and assembly operations at its step-down subsidiary Switch Mobility’s, Sherburn facility in the UK amid economic uncertainties in the nation’s bus manufacturing sector.

The company is reevaluating the current model, and plans to reduce its presence in the UK market and improve focus on Indian operations. Switch Mobility India is expected to be Ebitda break-even in FY25, and PAT break-even over the next four–six quarters. While downsizing Switch UK and focusing on Indian manufacturing operations may be positives from a long-term standpoint, increase in promoter pledge may remain an overhang on the stock in the near term.

We maintain Add, with an unchanged DCF-based target price of Rs 250, implying 12 times FY27E EV/Ebitda.

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