Buy Ashok Leyland; target of Rs 146: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Ashok Leyland (AL) reported a strong ~47% YoY growth in revenues (lower ~29% QoQ) to Rs62.5bn (PLe: Rs62.9bn) on the back of a robust 47.8% YoY growth in volumes, albeit on a low BS IV related pre-buy impacted base of last year. Q1FY19 operating performance however, marginally missed estimates with EBITDA margin at 10.4%, up 320bps YoY (on a low base) but lower 140bps QoQ and below PLe of 10.6%, owing to a realisation dip of 70bps YoY as well as QoQ. Despite the significant commodity cost rise, gross margins dipped just 50bps YoY (up 230bps QoQ) on the back of price hike taken by the company and favourable mix. EBITDA surged 111% YoY to Rs6.5bn while adjusted net profit for the company was up 210% YoY at Rs3.9bn (PLe: Rs3.8bn).

We maintain BUY with revised target price of Rs146 (earlier Rs169), at 12x Mar'20E EV/EBITDA.

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