Ashok Leyland Ltd (ALL) is the flagship company of the Hinduja Group, and one of the
largest commercial vehicle manufacturers in India. ALL is engaged in the
manufacturing of commercial vehicles and related components. ALL’s products include
buses, trucks, engines, defense and special vehicles. Ashok Leyland offers a range of
products from 18 to 82 seater double-decker buses, from 7.5 to 49 tonne in haulage
vehicles, from numerous special application vehicles to diesel engines for industrial,
marine and genset applications. The company is headquartered in Chennai, India.
The company’s manufacturing facilities are spread across India with two facilities in
Prague (Czech Republic) and Ras Al Khaimah (UAE). It has operations in India, Sri
Lanka, Bangladesh, Mauritius, the Middle East and Africa.

Outlook and Valuation: We expect Ashok Leyland to report net Profit (reported) CAGR
of ~19% to ~`2,075cr over FY2017-20E mainly due to improvement in replacement
demand (implementation of vehicle scrappage policy, which opens huge opportunity
for ALL). At the CMP of `139, the stock trades at PE of 19.6x its FY2020E EPS of `7.1.
We initiate coverage on the stock with a Buy recommendation and Target Price of
`163 based on 23x FY2020E EPS, indicating an upside of ~17% from the current

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