Ashok Leyland share price added 9 percent intraday on June 25 after the company turned profitable in Q4FY21. The company posted standalone net profit at Rs 241.1 crore in the fourth quarter of FY21 against a loss of Rs 57.3 crore in the year-ago period.
Its standalone revenue was up 82 percent at Rs 7,000.5 crore versus Rs 3,838.5 crore in the year-ago quarter.
Earnings before interest, tax, depreciation and amortization (EBITDA) were at Rs 533.7 crore and the margin expanded to 7.6 percent from 4.7 percent (YoY)
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Motilal Oswal said gross margins declined 580bp YoY (-250bp QoQ) to 23.1 percent (against estimates of 24.2 percent), hit by commodity cost inflation.
Higher depreciation and interest led to recurring PBT of Rs 2.8 b (estimated Rs 3.2 billion v/s loss of Rs 34 million in 4QFY20). Adjusted PAT stood at Rs 2.1 billion (estimated Rs 2.6 billion v/s loss of 118 million in 4QFY20). Adjusted loss for FY21 stood at Rs 3 billion (v/s profit of Rs 3.4 billion in FY20)
Net debt seems stable QoQ, but higher by around Rs 11.5 billion YoY to Rs 28.9 billion, the brokerage said.
The stock trades at FY23E 9.7x EV/EBITDA and 3.8x P/BV, it said, maintaining the "buy" rating.
"We believe H2FY22E could mark the start of a multi-year upcycle in M&HCV demand. However, we upgrade our FY22E/FY23E estimates by
~11 percent/14 percent as the CV OEM’s margins positively surprises despite cost headwinds," ICICI Securities said.
The brokerage values the core business at 14x (unchanged) FY23E EV/EBITDA on the improving CV cycle outlook and add Rs6/share (earlier: Rs7/share) for investments to arrive at SoTP-based target price of Rs 143 (earlier: Rs132). It has upgraded the stock to "buy" from "hold".
At 10.31 am, Ashok Leyland was quoting at Rs 127.30, up Rs 9.10, or 7.7 percent on the BSE.
The share touched a 52-week high of Rs 138.85 on February 4, 2021 and a 52-week low of Rs 45.25 on June 4, 2020. It is trading 8.32 percent below its 52-week high and 181.33 percent above its 52-week low.