Motilal Oswal's research report on Ashok Leyland
Ashok Leyland’s (AL) 1QFY25 result was a miss as EBITDA margin at 10.6% (up 60bp YoY) came in lower than our est. of 12.4% largely due to one-time expenses for the battery pack software. Management has reiterated its target of achieving mid-teen margins as it focuses on profitable growth.We expect a recovery in CV demand from 2HFY25 onwards as structural demand drivers remain intact. AL is the best investment choice in the CV growth cycle, as it has positioned itself to expand revenue/profit pools. Reiterate our BUY rating with a TP of INR285 (based on 11x Jun’26E EV/EBITDA + ~INR19/sh for the NBFC).
Outlook
We have marginally tweaked our FY25E/FY26E EPS. Reiterate our BUY rating with a TP of INR285 (based on 11x Mar’26E EV/EBITDA + ~INR19/sh for the NBFC).
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