Bearish on Ashok Leyland: Gaurang Shah

In a chat with ET Now, Gaurang Shah, VP, Geojit BNP Paribas Financial Services, shares his views on Ashok Leyland.

ET Now: There is a CLSA report which came sometime back maybe two weeks ago which spoke about Ashok Leyland saying that it is a leverage play on Indian CV cycle and historically has delivered the best stock returns when bought during the CV downturns. It is just probably starting to make a move. Do you believe this will die down or can Ashok Leyland really move on, it started the move from 18, it is at 22-23.5, is it still fundamentally a good idea if you want to play the CV up cycle?

Gaurang Shah: I really do not think so. Naturally, the lowest level I believe on Ashok Leyland was some 12 or 13 odd rupees and from there moving close to about 23 or 24 today. So the risk reward is really not favourable and worry is that though it is a little bit premature to speak about the revival in the CV segment especially for a company like Ashok Leyland wherein the company has also pulled out from Europe if I am not mistaken, it becomes little bit riskier to buy at these levels. So if you ask me a proxy play to Ashok Leyland, Eicher Motors or Tata Motors would definitely be a call to go and buy.