Lancelot D Cunha of ITI Wealth Management told CNBC-TV18, "Ashok Leyland came out with pretty difficult numbers. The sales volume was down on both the commercial and heavy vehicles and this is probably one of the results of slowing down in the economy as well as higher competition for freight and freight rates have been low. So this cycle of slowing sales is unlikely to turn around in a hurry because the economy first has to pick up and then freight rates have to support the purchase of new vehicles and that would then drive the business.”
“I think in the next two-three quarters, there is not going to be any significant change in the performance of either Ashok Leyland or the economy because it is going to take a while for things to improve. If you look at from a valuation perspective, the present price of Ashok Leyland is fairly valued because given that there is not going to be any significant change in earnings, you are probably going to see a little bit more deterioration in the financials over the next two-three quarters,” he added.
“Ashok Leyland has fairly high leverage in terms of borrowings, which it will have to first focus on trying to bring it down. So I think the company is going to face a little bit more pain and it would be possible to try and exit on some rallies rather than stay invested for a longer period.”
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