Ashok Leyland (AL) is the second-largest Commercial Vehicle (CV) manufacturer in India. It has a strong presence in the truck segment with a market share of 29% as of FY21. Q4FY21 revenue grew by 45%QoQ due to recovery in the volume by 32%. This was largely attributed to the pick in the construction activities & E-Commerce business (LCV segment). Despite steep increase in RM price, on a sequential basis margin expanded by 230bps, on the back of revenue enhancement and operational efficiency.
OutlookConsidering the positive announcement by the company and Govt.’s intent to kick start the Infra development, we except the valuation to continue at current level, and reiterate our buy rating.
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