For 2QFY2019, Ashok Leyland Ltd (ALL) posted good set of results both on top-line as well as bottom-line fronts. Revenue grew by 25.8% yoy to `7,608cr. On the bottom-line front, ALL reported PAT growth of 37.5% yoy to `460cr on the back of strong top-line growth and operating margin improvement.

Outlook and Valuation: We expect Ashok Leyland to report net profit (reported) CAGR of ~21% to ~`2,303cr over FY2018-20E mainly due to improvement in pre-buying sales (due to introduction of BS6 norms in FY2020) and replacement demand (implementation of vehicle scrappage policy). Thus, we recommend BUY on the stock with Target Price of `149.

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