Prabhudas Lilladher's research report on Ashok Leyland
Ashok Leyland’s (AL) 4QFY22 EBITDA margin at 8.9% (+125/480bps YoY/QoQ) beat our/consensus estimates, supported by higher average realizations (at Rs 1.8mn, +13/11% YoY/QoQ) and operating leverage. ASP growth was driven by favorable mix and multiple price hikes over FY22. Though AL’s domestic MHCV market share of 31.8% witnessed a 200bps contraction in FY22; in 4QFY22 market share grew to 30.4% from 26% QoQ led by model launches in tippers, multi-axle and CNG space. Channel inventory remains low. Also, discount levels are low leading to higher ASPs. Going ahead, we believe AL will continue to regain its lost share on the back model launches and revival in bus segment due to opening-up of the economy.
Outlook
Also, price retention due to demand and any softening of commodity prices will lead to margin expansion (EBITDA margin FY22/ FY23E/FY24E – 4.6/8.2/10.1%). Our estimates are largely unchanged. Maintain ‘BUY’ with a target price of Rs 170, 14x FY24E EV/EBITDA and ~Rs 14 for HLF.
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