Buy Ashok Leyland, target price Rs 170: Reliance Securities

Reliance Securities has buy call on Ashok Leyland with a target price of Rs 170. The current market price of Ashok Leyland Ltd. is Rs 141.6. 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 41479.00 Crore) operating in Auto sector.

Ashok Leyland Ltd. key Products/Revenue Segments include Commercial Vehicles, Spare Parts & Others, Sale of services, Engine & Gensets, Ferrous Castings, Scrap, Export Incentives and Other Operating Revenue for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 4103.27 Crore, down -49.82 % from last quarter Total Income of Rs 8176.73 Crore and up 171.44 % from last year same quarter Total Income of Rs 1511.69 Crore. Company reported net profit after tax of Rs -250.78 Crore in latest quarter.

Investment Rationale
The brokerage expects AL’s volume to record a healthy double-digit growth in FY22E and FY23E. It expects a stable market share for AL, while the brokerage estimate its EBIDTA margin of 10.8% in FY22E and 12% in FY23E (close to the previous peak, aided by a turnaround in LCV business). As the worst phase of the current down-cycle for M&HCV segment and AL seems to be over now, it believes an up-cycle in FY22 and FY23 would bring back high earnings growth and valuation expansion, which would lead to a sharp upside from the current level. It has a BUY rating on AL, with Target Price of Rs170.


Promoter/FII Holdings
Promoters held 51.54 per cent stake in the company as of 30-Sep-2021, while FIIs owned 16.33 per cent, DIIs 19.54 per cent.