Motilal Oswal is bullish on Ashok Leyland has recommended buy rating on the stock with a target price of Rs 158 in its research report dated 2 February 2018.
Motilal Oswal's research report on Ashok Leyland
Volume and realization drive revenues: AL’s revenues grew 47.3% YoY to INR71.1b (est. of INR69.5b), driven by volume growth of 47.3% YoY (+17.6% QoQ) and realizations growth of 3.8% YoY (+3.4% QoQ) to INR1.52m (est. of INR1.49m). AL took marginal price increase in November, and then further by 1-2% in Jan-18, which helped realizations in 3QFY18.
OutlookWe upgrade FY19/20 EPS by 1.5%/2.4%, as we raise volume estimate by 2.3% for FY19/FY20E, while we keep margin assumptions unchanged in FY19/20. We value AL at ~INR158 (11x Dec-19E EV/EBITDA + INR12.5/share for stake in HLF post 20% HoldCo Discount). Maintain Buy.
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