Ashok Leyland Ltd. share price target

18 July 2018 ALs volumes grew ~47% YoY (-28.8% QoQ). Realization fell 0.6% QoQ (-0.7% YoY) to INR1.48m/unit (est. AL took a price hike of ~2% in Apr18 to pass on RM inflation. Revenues grew 46.8% YoY (-28.8% QoQ) to INR62.5b (est.

during the same time along with employee costs. Below the operating level, other income grew well yoy, while depreciation expenses grew 8.3% yoy. Due to reduction in tax sops in Pantnagar, the tax rate came in at 28%. Net profits surged by 209% yoy as Q1...

1QFY19: New axle norms a temporary disruption In1QFY19, Ashok Leyland (AL) reported an operationally in-line performance with net sales of INR 62.5bn (+48% YoY,-29%QoQ) and EBITDA margin of 10.4% (+320bps YoY,-140bps QoQ). Gross margin surprised positively owing to strong growth in after-market and exports segment. Uncertainty and extent of impact on volume growth from the recent notification on maximum safe axle weight' (easing and formalising of higher carriage of weight per axle) was the major point of discussion during the post results earnings call. The management opined that the lead time required to comply with the new norms, in terms of finalising...

16 July 2018 According to media articles, the government is set to hike the load carrying capacity for M&HCV; trucks and tractor trailers by up to 25%. The government is likely to increase the gross vehicle weight (GVW) from 16.2 to 19 tons for a two-axle truck, from 25 to 28.5 tons for a three-axle truck, from 37 to 43.5 tons for a five-axle truck and from 44 to 49 tons for a tractor trailer with five axles. The new norms could improve the profitability of transporters, as the load increase will facilitate higher GVW, and thus, higher loading capability. In intra-state transportation, where overloading is already prevalent, CV demand would not be materially impacted by the hike in load carrying capacity. Thus, the new norms could have a negative impact on CV demand as the increase in vehicle load capacity will enhance truckload efficiencies.

Demand outlook for FY19 is positive across segments, driven by healthy rural sales momentum, expectation of normal monsoon for the third year in a row, and a pick-up in economic activities. Key threats to demand are posed by inflationary fuel prices and higher interest rates. Our top picks are Ashok Leyland, Bajaj Auto, and Hero Motocorp among the large caps, and Lumax Auto, JBM Auto and Jamna Auto among the mid/small caps space. We continue to like MSIL's unique moats, although valuation leaves little room for an upside. Automobiles sector will report a stellar quarter in 1Q led by strong recovery in rural demand, government spending on infrastructure, new launches and low base(led by BS1V and GST transitions). Most OEMs are likely to report high double-digit revenue growth, with Ashok Leyland (+51% YoY) Bajaj Auto (+45%) and MSIL(+28%) being the stand out performers. Excluding TTMT, Auto OEM universe is expected to post 30% revenue and 43% YoY EBITDA growth. Even Auto Ancillaries would also mirror this strong revenue performance(+28 % YoY)

ICICI Securities Ltd | Retail Equity Research Ashok Leyland's Q4FY18 results came in line with our estimates on the operational front. Revenues came in at | 8773 crore, up 32.6% YoY, 23.3% QoQ, below our estimate of | 9284.6 crore Total volumes increased 23.3% YoY, 25.9% QoQ to 58734 units with M&HCV; units growing 15% YoY to 44425 units while LCV volumes grew 59% to 14309 units. ASP of ~14.9 lakh was below our estimate EBITDA was at | 1032.7 crore, up 41.5% YoY, 31% QoQ vs. our...

Ashok Leyland (AL) 4QFY18 EBITDA margin were above our and below consensus estimates. EBITDA margin for the quarter were below consensus estimates due to decline in net realization and higher other expenses. Overall we believe FY18...

We value the stock at Rs 166 (18x FY20E EPS) and recommend a BUY. Driven by higher vols (+23% YoY) and ASP (+8% YoY) Ashok Leyland (AL) printed impressive revenues in 4QFY18 at Rs 87.8bn (+32% YoY). EBIDTA rose 42% YoY to Rs 10.32bn, with margin at 11.8% (+80bps YoY) driven by operating leverage. APAT grew 40% at Rs 6.7bn.

Ashok Leyland (ALL) reported 32.6% yoy and 23.3% qoq growth in the topline. Volume growth was at 23% yoy and the realizations were up by 7.8% yoy. The company maintained its market share despite cutting discounts and increasing prices. Margins came in at 11.8%, 80 bps higher yoy, and 70 bps higher qoq. A better product mix and operating leverage led to the margin outperformance. RM prices went up during the same time along with employee costs. Below the operating level, other income grew well both yoy and qoq, while depreciation expenses grew 5% yoy. Due to reduction in tax sops in Pantnagar, the tax rate came in at 28.4%. Net profits surged by 40.2% yoy, while...