CLSA retains 'sell' on Ashok Leyland, Tata Motors and Bharat Forge

NEW DELHI: CLSA has retained 'sell' rating on Ashok Leyland, Tata Motors and Bharat Forge as it sees rising probability of a downturn in the truck industry.

"Our analysis of truck industry volumes shows that sequential momentum is a good indicator of cyclical inflection points. Back-testing shows two consecutive quarters of QoQ (quarter-on-quarter) weak volumes occurred only when the industry was transitioning from an upcycle to a downturn, and vice-versa," said CLSA.

The ongoing truck upcycle is already in its fifth year and the third quarter of FY19 was sequentially weak, it said.


CLSA said the fourth quarter should also be weak unless March is better than the growth trends seen in recent months.

The brokerage has a target price of Rs 65 on Ashok Leyland and a target price of Rs 150 on Tata Motors. CLSA has a target price of Rs 420 on Bharat Forge.