Ashok Leyland's exports would record a healthy 12% CAGR, led by recovery in Africa/Asia. The Ebitda margin would increase due to a greater focus on profit (similar to those of peers) and tonnage/non-CV mix.
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Anand Rathi Report
Surpassing our Rs 11.3 billion estimate on more-than-expected revenue and less-than-anticipated other expenses, Ashok Leyland Ltd.'s Q3 Ebitda grew 9% YoY to Rs 12.1 billion. We expect India's medium and heavy commercial vehicle sector to turn positive with 6% growth in Q4, and a 5% CAGR over FY25-27, led by robust bus demand (an 8% CAGR), continuing replacement demand, infra/economic activity and a favorable base.
Exports would record a healthy 12% CAGR, led by recovery in Africa/Asia. The Ebitda margin would increase due to a greater focus on profit (similar to those of peers) and tonnage/non-CV mix.
Valuations are reasonable at 12 times/10 times FY26e/27e EV/Ebitda. We retain a Buy with a lower target price of Rs 260 (earlier Rs 290), 12x FY27e EV/Ebitda (13x FY27e) and Hinduja Leyland Finance at Rs 11/share.
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