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Last Updated : Aug 14, 2020 12:21 PM IST | Source: Moneycontrol.com

Hold Ashok Leyland; target of Rs 65: ICICI Direct

ICICI Direct recommended hold rating on Ashok Leyland with a target price of Rs 65 in its research report dated August 13, 2020.

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ICICI Direct's research report on Ashok Leyland


Ashok Leyland (ALL) reported a muted operational performance in Q1FY21. Revenues came in at Rs 651 crore (down 88.5% YoY) but ASPs rose to Rs 17.1 lakh/unit. ASPs appear optically high due to increase in proportion of other segment revenues in the overall sales mix for Q1FY21. Total CV sales volumes in Q1FY21 were at 3,814 units (down 90% YoY) comprising M&HCV sales volume of 1,021 units (down 96% YoY) and LCV sales volume of 2,793 units (down 78% YoY). Reported loss at the EBITDA level was at Rs 333 crore, with margin performance being heavily impacted by negative operating leverage. Consequent reported loss at the PAT level came in at Rs 389 crore, further impaired by a steep rise in interest costs.



Outlook


For ALL, demand picture stays muted although we may be close to a trough of the cycle, with revival pace dependent on pick-up in general economy and some policy intervention (scrappage policy). We retain HOLD, valuing it at Rs 65 (SOTP; 10x FY22E CV segment EV/EBITDA, 1.5x P/B for investments).


For all recommendations report, click here


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First Published on Aug 14, 2020 12:21 pm
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