Buy Ashok Leyland; target of Rs 275: Emkay

Emkay is bullish on Ashok Leyland has recommended buy rating on the stock with a target price of Rs 275 in its research report dated November 09, 2024.

Broker Research

November 11, 2024 / 20:51 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay's research report on Ashok Leyland

Despite muted volumes in 2Q, AL reported 100bps margin expansion to 11.6% on sustained pricing discipline, material cost controls, and growth in the non- MHCV portfolio. Management reiterated its optimism on CV industry demand in H2, and maintained its medium term mid-teen EBITDA margin guidance and 35% MHCV market share ambition. We expect CV industry volume to improve from H2 (aided by a more benign base and resumed infrastructure spends), and FY25E-27E volume CAGR in a mid-single-digit. We trim FY25E/25E/27E EPS by ~3%/2%/2%, building-in a more gradual margin improvement amid a softer economic outlook.

Outlook

We maintain BUY on AL and cut our SoTP-based TP to Rs275 (on 12.5x Sep-26E EV/EBITDA + 2x P/B for HLFL). AL is among the least expensive auto OEMs (12% EPS CAGR, net cash BS, >25% return ratios).

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