Buy Ashok Leyland; target of Rs 151: Sharekhan

Sharekhan's research report on Ashok Leyland

ALL’s Q3FY21 results were below expectations, mainly due to lower than expected recovery in EBITDA margins. We expect ALL’s profitability to improve significantly, with its EBITDA growing at 157% CAGR for FY2021-23E. Despite the run up in the stock, it is still available below its historical average multiples. The stock is trading at P/E of 18.3x and EV/EBITDA of 10.2x its FY2023E estimates. We retain our Buy rating on the stock.

Outlook

We reiterate our Buy rating on Ashok Leyland Limited (ALL) with a revised PT of Rs 151, owing to faster than expected recovery in macro-economic activities, leading to benefits in the CV industry.