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Buy Ashok Leyland target of Rs 153: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Ashok Leyland has recommended buy rating on the stock with a target price of Rs 153 in its research report dated June 28, 2021.

June 28, 2021 / 12:04 PM IST
 
 
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Prabhudas Lilladher's research report on Ashok Leyland


AL’s Q4FY21 results beat our Revenue/EBITDA/Adj. PAT estimates by 8%/29%/66% led by 1) strong volume growth, 2) increasing share of MHCV causing better realizations and 3) operating leverage benefits compensating RM cost inflations. We note improvement in fleet utilization levels post opening of the economy in June. Economic recovery will further improve utilization and drive replacement demand for CV particularly MHCV, in our view. Furthermore, AL is expected to regain its lost share led by strong pickup in new models and recovery in Haulage (~50% share) and Bus segment (~45% share). While we expect RM headwinds to continue, operating leverage and cost control should drive margin expansion by 670bp over FY21-23.



Outlook


We cut FY22 EPS by 14.3% to factor impact of concurrent lockdowns, while revising FY23 EPS by +4.5% to factor recovery and margin benefits. Maintain ‘BUY’ with revised TP of Rs153 (v/s Rs149 earlier) based on 14x FY23 EV/EBITDA and ~Rs18 for HLF.



For all recommendations report, click here

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first published: Jun 28, 2021 12:04 pm
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