For 1QFY2020, Ashok Leyland Ltd (ALL) posted disappointing results on both topline
and bottom-line fronts. Revenue de-grew by 9% yoy to `5,684cr. Further,
operating margin contracted by 129bps. On the bottom-line front, ALL’s PAT
declined 45.4% yoy to `230cr on the back of lower sales and poor operating

Outlook and Valuation: During 1QFY2020, ALL’s volume growth remained
subdued due to overall slowdown in economy, lower freight availability and delay
in purchases led by confusion around GST. However, ALL has outperformed the
industry in 1QFY20. Further, we believe, any revival in CV industry (due pre-buying
ahead of BS-VI) would benefit ALL owing to its strong position in industry (market
share gains), diversified portfolio and strong brand & distribution network.
Considering the above factors, we maintain our Buy recommendation on ALL with
Target Price of `93.

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