Accumulate Ashok Leyland; target of Rs 109: Dolat Capital

Dolat Capital's research report on Ashok Leyland

Ashok Leyland (AL)’s revenue and operating performance were in line with our estimates in 4QFY19. We believe M&HCV truck growth will trend down in 1QFY20, due to impact of relaxation in axle load norm, liquidity constraint, a high base, and high fuel prices. However, the growth momentum will continue to be strong for the medium-to-long term, driven by 1) pick-up in infrastructure, construction, e-commerce, and mining activities; 2) pre-purchases for BS-VI in 2Q/3QFY20; and 3)
introduction of scrappage policy in FY21.

Outlook

We recommend Accumulate, with TP ` 109(16xFY21E EPS).