ICICI Direct recommended hold rating on Ashok Leyland with a target price of Rs 75 in its research report dated November 12, 2019.
ICICI Direct's research report on Ashok Leyland
Ashok Leyland (ALL) reported a weak Q2FY20 performance. Revenues at Rs 3,930 crore were down 48.4% YoY with ASPs at Rs 13.6 lakh/unit. Total CV sales volumes were at 28,937 units (down 44% YoY; M&HCV down 56%, LCV down 10.7%, LCV to MHCV mix at 42:58). EBITDA margins at 5.8% (down 360 bps QoQ) were impacted severely by negative operating leverage. Consequent PAT came in at Rs 39 crore (vs. Rs 460 crore in the base quarter) after exceptional items to the tune of Rs 64.8 crore.
We value the stock at Rs 75 (SOTP; 8.5x EV/EBITDA on FY21E CV business, 1x P/B for long term investments) and maintain our HOLD rating.
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