Add Ashok Leyland, target price Rs 165: ICICI Securities

ICICI Securities has add call on Ashok Leyland with a target price of Rs 165. The current market price of Ashok Leyland is Rs 148.9.

Ashok Leyland, incorporated in the year 1948, is a Large Cap company (having a market cap of Rs 43513.41 Crore) operating in Auto sector.

Ashok Leyland key Products/Revenue Segments include Commercial Vehicles, Spare Parts & Others, Sale of services, Engine & Gensets, Ferrous Castings, Scrap, Export Incentives, Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-03-2023, the company has reported a Consolidated Total Income of Rs 13233.16 Crore, up 26.87 % from last quarter Total Income of Rs 10430.39 Crore and up 32.89 % from last year same quarter Total Income of Rs 9957.95 Crore. Company has reported net profit after tax of Rs 794.59 Crore in latest quarter.

The company’s top management includes Mr.Dheeraj G Hinduja, Mr.Saugata Gupta, Mr.Jose Maria Alapont, Dr.Andrew C Palmer, Mr.Manisha Girotra, Mr.Sanjay K Asher, Mr.Jean Brunol, Dr.Andreas H Biagosch, Mr.Shom Ashok Hinduja, Mr.Gopal Mahadevan, Dr.C Bhaktavatsala Rao. Company has Price Waterhouse & Co Chartered Accountants LLP as its auditors. As on 31-03-2023, the company has a total of 294 Crore shares outstanding.

Investment Rationale
The brokerage cut its EBITDA estimate forFY24E/FY25E by 4%/10%, respectively, as it believes there is limited scope for EBITDAM to sustain at ~11% across FY24-25E.

The brokerage downgrades the company to ADD from Buy with a revised DCF-based TP of Rs165 (earlier: Rs183), implying 12x FY25E earnings. Majority of the cut in valuation is due to an increase in cash outflow on account of investment in Switch, with limited visibility of EBITDA generation from it in the near term.

Promoter/FII Holdings
Promoters held 51.53 per cent stake in the company as of 31-Mar-2023, while FIIs owned 14.85 per cent, DIIs 22.06 per cent.