Motilal Oswal is bullish on Ashok Leyland has recommended buy rating on the stock with a target price of Rs 179 in its research report dated April 10, 2018.
Motilal Oswal's research report on Ashok Leyland
We met the senior management of Ashok Leyland (AL) to get an update on (a) the CV industry, and (b) AL’s strategic initiatives in the truck business and newer businesses to reduce earnings cyclicality. We came back positive on (a) the outlook for the CV industry over the next two years, (b) potential triggers to dilute the impact of pre-buying in FY21, and (c) AL’s initiatives in newer segments. Our key takeaways.
Outlook
With recovery in demand and ramp-up in newer focus areas, coupled with cost reduction measures, we estimate EBITDA margin to gradually improve to 11.9% by FY20. We value AL at INR179 [10x March 2020E EV/EBITDA + INR13.1/share for stake in HLF post 20% HoldCo discount]. Maintain Buy.For all recommendations report, click here
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