Accumulate Ashok Leyland target of Rs 240 Prabhudas Lilladher

Prabhudas Lilladher recommended Accumulate rating on Ashok Leyland with a target price of Rs 240 in its research report dated November 11, 2024.

Broker Research

November 11, 2024 / 13:21 IST

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Ashok Leyland

Ashok Leyland's Q2FY25 standalone revenue increased by 2% QoQ, 2%/3% lower than PLe/consensus estimates. Higher mix of LCVs in the volume led its ASP to decline by 1.9% QoQ. Gross profit increased by 5.6% QoQ while margin expanded by 99bps QoQ/235bps YoY to 28.8%, as a result of favorable input prices and cost cutting initiatives. EBITDA increased by 11.7% QoQ while margin expanded by 101bps QoQ/40bps YoY to 11.6%. PAT increased by 46.5% QoQ/37.3% YoY, boosted by high other income and exceptional gain on investment in subsidiary. Adjusting the exceptional item, PAT grew by 29.3% QoQ/17.5% YoY. We cut our estimates by 7-14% over the forecasted period, largely on the account FY25 being affected by slowdown in overall infrastructure spending and fleet operating levels, impacting its volume growth and further its operational performance. The management expects H2FY25 volume growth to be healthy on the account of favorable base of last year. Despite pickup in H2FY25, we anticipate its volume to de-grow by 1.2% over last year. Pickup in infrastructure activities, capex from government and replacement demand could start a new upcycle in demand from FY26.

Outlook

Factoring this, we estimate its revenue/EBITDA/PAT to grow at a CAGR of 6%/7%/11% over FY24-27E and retain our “Accumulate” rating with a TP of Rs240 (previous Rs257), valuing its core business at 11.5x on Sept’26E EV/EBITDA and HLF at Rs16.

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