Arihant Capital's research report on Ashok Leyland
Ashok Leyland (AL) has reported a stellar set of numbers on all front in Q4FY21. Standalone revenue stood at INR 69,720 Mn, above our estimates of INR 53,226 Mn registering +82.8% YoY/45.6% QoQ. EBITDA stood at INR 5,342 Mn, above our estimate of INR 3,136 Mn, Registering +192%YoY/+~111%QoQ. On the margins front, EBITDA margin was up by 286bps YoY/236bps QoQ to 7.6%, against our estimates 22bps YoY 6%. Standalone adjusted PAT saw an increase of 1686%YoY/665.1% QoQ to INR 2,038 Mn vs below our estimate of INR 127 Mn. Total Volume was up by 17.9%YoY/89.5% QoQ to 11,69,664 units. The total MHCV industry volume had gone up by 66%. During Q4 FY’21, year on year MHCV truck volumes for AL have grown at 111% which is better than the rate of growth of the industry. AL’s MHCV truck market share for Q4 FY’21 has therefore improved to 28.9% vis-a-vis 27.6% in Q4 FY’20.
We Value Ashok Leyland at PE multiple of 36x for parent auto maker for FY23E EPS of INR 3.8 and with the 7% stake in Hinduja Leyland Finance contributing INR 7 per share intrinsic value, We assign an Accumulate rating and value it with SOTP valuation for a target price of INR 144.