Shares of Ashok Leyland surged nearly 6% to a record high of Rs 222.85 on May 27 after strong performance in the January-March quarter (Q4FY24). Brokerages are optimistic about the company’s future, citing strong guidance for FY25, attractive valuations, and a positive outlook for commercial vehicle (CV) demand.
Emkay Institutional Equities upgraded Ashok Leyland from ‘sell’ to ‘buy’, setting a target price of Rs 250 per share, which suggests a 12% increase from current levels.
“With consistent profitability for fleet operators, we believe CV manufacturers can maintain pricing power and expand margins, boosting FY26 estimated earnings per share (EPS) by around 19%. Despite a 21% stock price rise in three months, Ashok Leyland remains one of the least expensive original equipment manufacturers (OEMs),” Emkay analysts noted.
JM Financial also maintained a ‘buy’ rating on Ashok Leyland, with a target price of Rs 275 per share, emphasizing the company’s focus on profitable growth. “Lower commodity costs and smart cost control measures are expected to support profitability. We estimate an 8% revenue growth and a 22% EPS growth from FY24 to FY26,” JM Financial analysts added.
In Q4FY24, Ashok Leyland’s net profit grew 20% year-on-year (YoY) to Rs 900 crore, although revenue from operations fell by 3% YoY to Rs 11,266 crore.
In the Medium and Heavy Commercial Vehicle (M&HCV) bus segment, Ashok Leyland became the market leader, gaining 5.8 percentage points in market share.
The company also announced that KM Balaji will become the new Chief Financial Officer (CFO) starting June 1, 2024. The current CFO and Whole Time Director, Gopal Mahadevan, will continue with Ashok Leyland as Director of Strategic Finance and Mergers & Acquisitions (M&A).
In his new role, Mahadevan will focus on growing Ashok Leyland’s subsidiary companies and developing M&A strategies, the company stated in an exchange filing.
So far this year, Ashok Leyland shares have risen over 22%, outperforming the benchmark Nifty 50 index’s 6% increase.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
