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ICICI Securities Maintains Buy Rating For Large Cap Auto Stock, Target Price Rs 180

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ICICI Securities has assigned buy call for leading Auto sector stock, Ashok Leyland with a target price of Rs 180 apiece. The current market price of Ashok Leyland is Rs 149 apiece with an intraday decline of 0.40%. The company has a market capitalisation of Rs 43,895 crore. If you buy Ashok Leyland at current market price, you will receive double digit return.

 

According to ICICI Securities, "Retail demand for goods trucks is being strongly aided by infrastructure push, private capex cycle picking up, metals / mining / cement production remaining robust, and sizeable replacement demand. With FY23 goods M&HCV market volumes yet to match FY19 levels (present retail run-rate is similar to FY12 levels), the rising demand for road freight is being catered to by the ageing fleet with fleet population remaining largely static.

Check key takeaways below:

1. Ashok Leyland Stock Performance

1. Ashok Leyland Stock Performance

The current market price of the stock is Rs 149 apiece with an intraday fall of 0.40% on BSE. The stock's 52-week high is Rs 169 apiece and 52-week low is Rs 93 apiece, respectively. ICICI Securities has assigned buy call to the stock with a target price of Rs 180 apiece and potential return of 20%.

2. Ashok Leyland Return Over The Years

2. Ashok Leyland Return Over The Years

The stock has given 23% return in last 5-years, 89% in last 3-years, and 23% in last 1-year. the stock has jumped nearly 4% in last 1-week.

3. Ashok Leyland Entering A Period Of Better Profitability
 

3. Ashok Leyland Entering A Period Of Better Profitability

According to ICICI Securities, "we recently interacted with Ashok Leyland (AL) management in order to understand the company's growth and profitability outlook. Following are the key takeaways: a) industry demand continues to be robust led by growth in inter alia infrastructure, mining and e-commerce segments; b) need for new trucks is being driven by replacement demand, ageing of fleet population and better productivity of new multi-axled trucks; c) small truckers are yet to push new truck demand with goods M&HCV market already moving closer to FY19 levels, implying that the present CV upcycle is still far from peaking out."

4. Ashok Leyland Valuation

4. Ashok Leyland Valuation

According to ICICI Securities, "With the lag effect of falling steel prices, gradual price hikes and improving mix, AL is looking forward to move up to >10% EBITDAM in the coming quarters; e) targeted capex is expected to be sub-Rs7bn in FY23 given that there is no need for capacity addition. Company expects to close Switch Mobility funding needs in FY23 itself. We maintain BUY on AL with a DCF-based target price of Rs180, implying 12x FY24E EV/EBITDA, keeping our estimates unchanged."

5. Ashok Leyland About

5. Ashok Leyland About

Ashok Leyland, flagship of the Hinduja group, is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world, and 19th largest manufacturers of trucks. Ashok Leyland is the first truck and bus manufacturer outside of Japan to win the Deming prize for its Pantnagar plant in 2016 and the Hosur Unit II has been awarded the Deming Prize in 2017, according to its official website.

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.

Story first published: Tuesday, November 29, 2022, 12:04 [IST]
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