Please refer to important disclosures at the end of this report
Ashok Leyland Ltd (ALL) is the country's second largest CV manufacturer. The
company has a strong presence in the MHCV segment, with a domestic market share
of ~35% as of 1QFY2018. It is expected to launch new LCV every quarter in FY18E
which will also help in higher sales. ALL expects to do well going ahead with its new
technology IEGR. ALL is a pure CV play and is expected to benefit from government’s
push to improve infrastructure. The MHCV segment, accounts for 3/4th of ALLs total
volumes and has grown at a 3 year CAGR of 11% by FY16. We expect the
momentum to continue, in FY18E and FY19E as economic outlook improves. ALL has
taken 4% price hike in January, 7-10% hike in April-17 (owing to the BSIV transition)
and has taken another hike in 1QFY18 to offset higher input prices. We expect ALL’s
margins to remain at the current levels for new two years (>10%). This level of
margins is significantly higher than the margins seen during FY12-FY15 when
automobile industry was going through a period of slower growth. Owing to this,
company is expected to see improvement in RoE profile. We expect ALL’s average RoE
to remain at ~21.8% over next two years indicating strong improvement in return
ratios. It has been maintaining healthy dividend payout of 43.26% and cashflows has
improved from `95.07cr in FY15 to `270cr in FY17. The company has a ROE of
23.88% and at CMP of `113 it is currently trading at a valuation PE of 23.29x of
FY17 TTM earnings. Hence BUY.
CMP `113
Reuters Code
BSE Sensex
Face Value (`)
Commercial Vehicle
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Ashok Leyland Ltd
Others | Commercial Vehicle
Nov 23, 2017
Ashok Leyland Ltd |Commercial Vehicle
Oct 13, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Ashok Leyland
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)