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Motilal Oswal Report
Ashok Leyland's (AL's) 4QFY23 results were encouraging, led by EBITDA margin of ~11% (v/s est. 10.2%), driven by moderating discounts, favorable product mix, and efficient cost-control measures. Underlying demand drivers continue to remain positive with management guiding 10-12% YoY growth for the MHCV industry in FY24E. This, coupled with focus on improving ASPs, stable RM and op leverage should drive EBITDA margin expansion by 190bp/50bp YoY in FY24/25E.
While we raise our EBITDA estimates by 5.5%/3.3% for FY24/25, we cut FY25 EPS estimates by 3.8% (FY24 stable) to account for higher tax. We reiterate our BUY rating with a TP of INR180 (10x Mar-25 EV/EBITDA based + ~INR11/share of NBFC).
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