For 3QFY2019, Ashok Leyland Ltd (ALL) posted results, which disappointed on both top-line as well as bottom-line fronts. Revenue de-grew by 12% yoy to `6,325cr. However, operating margin improved by 225bps. On the bottom-line front, ALL reported PAT de-growth of 21.5% yoy to `381cr on the back of lower sales.

Outlook and Valuation: We expect Ashok Leyland to register net profit (reported) CAGR of ~10% to ~`1,884cr over FY2018-20E mainly due to improvement in pre-buying sales (owing to introduction of BSVI norms in FY2020) and replacement demand (implementation of vehicle scrappage policy). Thus, we recommend BUY on the stock with Target Price of `122.

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