Buy Ashok Leyland, target price Rs 165: Edelweiss

Edelweiss has buy call on Ashok Leyland with a target price of Rs 165. The current market price of Ashok Leyland Ltd. is Rs 125.

Time period given by analyst is one year when Ashok Leyland Ltd. price can reach defined target.
Ashok Leyland Ltd., incorporated in the year 1948, is a Large Cap company (having a market cap of Rs 36488.60 Crore) operating in Auto sector.


Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 8176.73 Crore, up 36.27 % from last quarter Total Income of Rs 6000.28 Crore and up 59.48 % from last year same quarter Total Income of Rs 5127.11 Crore. Company reported net profit after tax of Rs 374.66 Crore in latest quarter.

Investment Rationale
The brokerage likes AL’s efficient manufacturing and sound balance sheet (ex-vehicle financing business). It maintains ‘BUY/SO’ with TP of INR165 (17.5x Sep 2022E EV/EBITDA; and INR9/share for financing business). The stock is trading at FY22/23E PER of 44.3x/19.7x.

Promoter/FII Holdings
Promoters held 51.5 per cent stake in the company as of March 31, 2021, while FIIs held 18.2 per cent, DIIs 16.6 per cent and public and others 13.7 per cent.