Commercial vehicle manufacturer Ashok Leyland’s shares slumped 10.46% on the BSE, after its managing director and CEO Vinod K. Dasari said he would step down.
On Wednesday, the shares lost ₹12.45 to close at ₹106.60 on the BSE.
For the second quarter ended September 2018, Ashok Leyland reported 38% growth in its standalone net profit to ₹460 crore. Its revenue rose 25% to ₹7,608 crore.
Kotak Institutional Equities, in a report, said that it maintained buy on Ashok Leyland and increased its target price to ₹170 from the ₹160 earlier.
Short-term setback
The brokerage said Mr. Dasari’s resignation was a short-term setback. But, the firm was well-prepared to meet upcoming challenges, it added.
“The firm reported EBITDA of ₹806 crore, (+32% yoy), which was 6% lower than our estimates due to higher-than-expected increase in discounts and an inferior product mix. EBITDA margin came in at 10.6% in 2QFY19, which was slightly below our estimates. The company has raised volume growth outlook for the industry to 15-20% yoy in FY2019 (from 10-12% earlier) and remains confident that demand will stay strong in FY2020 as well due to pre-buy,” he said.
Nomura Capital India Pvt. Ltd. maintained a neutral call on the firm and cut target price to ₹123 from ₹125 per share. Q2 EBITDA was lower than estimates on weak product mix and higher discounting pressures.
Mr. Dasari’s resignation could cause some short-term concerns, it said.
CLSA maintained sell rating on Ashok Leyland with a target price of ₹100 per share.