Buy Ashok Leyland; target of Rs 194: KR Choksey

KR Choksey is bullish on Ashok Leyland has recommended buy rating on the stock with a target price of Rs 194 in its research report dated July 07, 2023.

Broker Research

July 13, 2023 / 17:11 IST

Buy

26 Aug, 2025 12:21

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KR Choksey's research report on Ashok Leyland

Ashok Leyland (AL) is the flagship company of the Hinduja group and the 2nd largest manufacturer of commercial vehicles in India. The company has a footprint across 50 countries and has a product range from 1T GVW (Gross Vehicle Weight) to 55T GTW (Gross Trailer Weight) in trucks. AL is benefitting from the industry tailwinds in the domestic CV market owing to government infrastructure spending, strong replacement demand and healthy traction from core industries like steel, cement and mining. Further growth is possible with the enforcement of the scrappage policy as well as increasing urbanization and replacement of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) buses bought in FY 10-13. AL has managed to gain a market share of 4.7% in FY23 in the M&HCV Bus and Truck segment, reaching a share of 31.8%. The market share gain has been achieved despite AL raising prices, backed by better acceptance of its AVTR product platform. AL’s consistent focus on expanding its network both in MHCV and LCV businesses immensely helped in increasing its market penetration. AL is putting greater efforts into reducing costs – both product costs as well as overheads. FY23 has been a record year in efficiency improvements. Many of the initiatives started last year covering value engineering, waste reduction, digitization of manual processes, other overhead reduction etc., have yielded good results and are continued in FY’24E.

Outlook

We have assigned a P/E multiple of 21x (unchanged) on FY25E EPS of INR 9.3 (unchanged) to arrive at a target price of INR 194/ share (unchanged). The target price implies a potential upside of 19.4% from the CMP. Accordingly, we maintain our “BUY” rating on the shares of Ashok Leyland Ltd.

For all recommendations report, click here