Buy Ashok Leyland; target of Rs 268: Sharekhan

Sharekhan's research report on Ashok Leyland

With sharp gross margin expansion and healthy traction in non-vehicle business ALL beats estimates in Q2FY25. This was the seventh consecutive quarter when ALL has maintained its EBITDA margin above 10% mark. The management has shared a positive outlook for the CV industry in H2FY25.

Outlook

We retain a Buy with a revised PT of Rs. 268 in expectation of sustainable double-digit EBITDA margin and its profit-focused volume growth strategy. Stock trades at P/E multiple of 18.1x and EV/EBITDA multiple of 9.6x its FY27E estimates.