Prabhudas Lilladher's research report on Ashok Leyland
AL standalone revenue declined by 3.1% YoY, coming in marginally lower than PLe/BBGe. ASP increased by 2.8% YoY/2.0% QoQ indicating lower discounts and better pricing across the product portfolio. Its margin at 14.1% beat PLe of 13.2% driven by lower input costs and employee expenses. The management will continue to work towards improving its EBITDA margin towards mid-teens which will be led by pricing action, cost cutting initiatives and discipline on discounts. We believe AL is well placed to deliver on market share gains and volume growth which will be driven by new launches and demand for higher tonnage CVs. Additionally, it is looking to fill white spaces in LCV segment with further 6+ new launches planned for FY25 including EVs.
Outlook
Factoring this, we increase our EBITDA estimates by 10.6%/18.1% FY25/FY26 respectively. We retain our buy rating with a TP of Rs 239 (previous Rs 210) valuing its core business on 10.5x on its EV/EBITDA and HLF at Rs 13.
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