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ICICI Securities Report
Ashok Leyland Ltd.'s Q1 FY22 operating performance was below consensus estimates as Ebitda margin dropped 1,238 basis points QoQ to down 4.7%.
Drop was largely driven by negative operating leverage as fixed costs remained elevated on lower volumes.
With the government of India's infra push and commodity prices reaching new highs, key industry monitorables are:
pace of recovery of economic activity and capex trends across segments;
used vehicle demand/pricing trends; and
trends in freight rates/fleet utilisations.
We estimate Ashok Leyland's volumes to rebound at ~31% compound annual growth rate across FY21-FY23E driven by strong market share gains in light commercial vehicles and medium and heavy commercial vehicle revival coupled with building of an electric vehicle ready portfolio.
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