Ashok Leyland Ltd. share price target

Ashok Leyland (AL) is the second-largest Commercial Vehicle (CV) manufacturer in India. It has a strong presence in the truck segment with a market share of 29% as of FY21. Q3FY22 revenue grew by 24% QoQ due to pick up in the LCV demand and strong growth registering in the M&HCV segment. However, the margin came lower on account of steep rise in raw material cost. We expect the price to show some respite at current level owing to softening commodity price....

Resurfaced chip availability concerns amid geopolitical issues Russia is the largest producer (~40% share in global production) of rare earth metal palladium, which is used in manufacturing of semiconductor. Further Ukraine is the largest producer of neon gas, which is another important component for semiconductor (chip) manufacturing. Therefore, any supply chain disruption of these critical raw materials in this space would impact the availability of chips, resulting in an adverse impact on OEM volumes and associated productivity. Rise in Brent crude to impact margins as well as demand...

Fund raising in Switch Mobility of ~USD 200mn. AL's 3QFY22 revenue at Rs 55.3bn (PLe: Rs 57.3bn) grew 15%/24% YoY/QoQ led by 2%/24% growth in volumes. ASPs remained flat QoQ at Rs 1.6mn. EBITDA margin at 4% was impacted by high raw material cost (RM cost 78% of sales vs 74/77% YoY/QoQ). MHCV market share improved by ~140bps for AL. The company, under its EV business is setting up a facility in Spain for which ~USD 200mn will be raised. We believe new CNG models to be...

We tweak our estimates downwards to factor in near-term headwinds and lower volumes. We maintain our BUY rating on the stock and value it at 18x FY24E EPS to arrive at a TP to Rs 160 (Rs 175 earlier), implying an upside of 29% from CMP.

Ashok Leyland (AL) reported slender profits of 57.6 mn, however adjusted for exceptional item of 421 mn, the company reported losses at 362 mn which were still lower than 832 mn of yoy while dropped by 100 bps qoq. LCV market share saw a growth since its recent launches like the Bada Dost performed exceedingly well. On the back of 3% fall in volume yoy, and increased...

Ashok Leyland (AL) is the second-largest Commercial Vehicle (CV) manufacturer in India. It has a strong presence in the truck segment with a market share of 29% as of FY21. Q2FY22 revenue grew by 51% QoQ due to pick up in the M&HCV demand and strong growth registering in the LCV segment. We expect the margin to improve going forward owing to reduction in the commodity cost and better cost management. We believe the economic activities to recover gradually at current...

Hence, we retain our BUY rating on the stock with a TP of Rs 175 (Rs 160 earlier), valuing the stock at 18x its FY24E EPS.

Losses narrow down in Q2, CV and EV demand may provide the required push Ashok Leyland (AL) reported small losses of 832 mn in Q2 v/s 2.8 bn qoq and 1.45 bn yoy as volume growth has been strong in Q2. The realizations were up by 20.3% yoy and flattish qoq on price hikes taken during the quarter sequentially and product mix shifting towards high margin LCVs. The company's market share declined a bit as southern markets were impacted by Covid...

in MHCV; LCV market share at record high of 23% led by Bada Dost. AL's Q2FY22 revenue came at Rs 44.6b (57% yoy, PLe 46.3b) led by 42%/11% YoY growth in volumes/ASP. ASPs declined QoQ led by poor mix and increased discounts. Gross Margins at 23.3% (-260bps QoQ, PLE:25.2%) were impacted by higher RM costs however, lower than expected other expenses and employee costs diluted this impact. Improvement in fleet utilization levels led by higher infra spending, construction & mining, improved financing...