Accumulate Ashok Leyland; target of Rs 282: KR Choksey

KR Choksey recommended accumulate rating on Ashok Leyland with a target price of Rs 282 in its research report dated July 30, 2024.

Broker Research

July 31, 2024 / 13:15 IST

Accumulate

26 Aug, 2025 12:21

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KR Choksey's research report on Ashok Leyland

The revenue for the Q1FY25 stood at INR 85,985 Mn, which grew by 5.0% YoY/ (-23.7% QoQ) driven by healthy growth in CV volumes. Revenue was in line with our estimate (-1.2%). The realization per vehicle decreased by 1.1% YoY/ 2.2% QoQ. EBITDA for the quarter was INR 9,109 Mn, reflecting a growth of 11.0% YoY (-42.8% QoQ). EBITDA underperformed our estimate on the back of higher-than-expected operating expenses. The EBITDA margin was 10.6%, expanded by 57 bps YoY but contracted by 354 bps QoQ, impacted by lower volumes and realization. Adj. PAT for the quarter was at INR 5,256 Mn, which declined by 8.9% YoY (-45.8% QoQ), which missed our estimates primarily due to the disappointing operating performance and lower other income.

Outlook

We raise our FY25E/FY26E EPS estimate by 10.9%/15.7%, respectively, on the back of a robust product pipeline and expected M&HCV demand recovery. Accordingly, we assign a P/E multiple of 20.0x (unchanged) on FY26E EPS of INR 14.1 to arrive at a target price of INR 282/share (previously: INR 243). Given the 11.0% upside potential, we maintain our ‘ACCUMULATE' rating on the shares of Ashok Leyland.

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