Ashok Leyland - Demand Consolidation Phase Currently Prior To Downcycle: ICICI Securities

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Securities Report.Post recovering ~120% in volume terms from the lows of FY21, domestic goods medium and heavy commercial vehicle market is currently up ~20- 25% above its tonnage-adjusted incremental supply level in the previous peak of FY19. We are building in flat volume for domestic goods M&HCV industry in FY25E, followed by a year of ~10% decline in FY26E. In line with industry decline, we are building in goods M&HCV volume decline of 10% for Ashok Leyland in FY26E, post remaining flat in FY24-25E. We are building in Ebitdam for Ashok Leyland in FY26E at 8% versus 10.5% in FY25E, on the back of adverse operating leverage and potential pressure on pricing. We downgrade Ashok Leyland to Sell from Hold, with a revised discounted cash flow-based target price of Rs 140 (earlier Rs 177), implying 12 times FY26E enterprise value/Ebitda. Change in target price is primarily due to valuation rollover to a weaker FY26..Upside risksGrowth in domestic goods MHCVs in FY25 and FY26 driven by enhanced focus on capex cycle by the government post electionsAshok Leyland executing its target mid-teen margin ahead from current ~11-12% levelsAshok Leyland being able to sell stake in Switch Mobility down the line, thus helping it get back the Rs 16 billion paid from its standalone cashflow..Click on the attachment to read the full report:.Oil Marketing Companies - Earnings Volatility A Risk; But Attractively Placed: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Ashok Leyland - Demand Consolidation Phase Currently Prior To Downcycle: ICICI Securities

We downgrade Ashok Leyland to Sell from Hold, with a revised discounted cash flow-based target price of Rs 140 (earlier Rs 177), implying 12 times FY26E enterprise value/Ebitda.

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Ashok Leyland - Demand Consolidation Phase Currently Prior To Downcycle: ICICI Securities

We downgrade Ashok Leyland to Sell from Hold, with a revised discounted cash flow-based target price of Rs 140 (earlier Rs 177), implying 12 times FY26E enterprise value/Ebitda.

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