Buy Ashok Leyland, target price Rs 181: Motilal Oswal

Motilal Oswal has buy call on Ashok Leyland with a target price of Rs 181. The current market price of Ashok Leyland is Rs 127.6. 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 37457.33 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
AL remains a pure-play on the CV cycle recovery. Unlike the previous cycles, it is on a strong footing (lean cost structure and reasonable debt) and is focused on adding new revenue/profit pools. AL’s revenue/EBITDA/PAT is estimated to post a 23%/44%/78% CAGR over FY20–23E on a low base of FY20. Valuations of 19.5x/10.4x FY22E/FY23E EV/EBITDA are at an early recovery cycle. The brokerage maintains Buy, with TP of INR156/share (12.8x FY23E EV/EBITDA).

Promoter/FII Holdings
Promoters held 51.1 per cent stake in the company as of March 31, 2021, while FIIs held 18.8 per cent, DIIs 16.7 per cent and public and others 13.5 per cent.