This CV Stock Has The Potential To Rally As Much As 40% As Economy Recovers

Markets have been consolidating around that 58,000 points mark for sometime now. However, while the indices are steady around those levels, individuals stocks have been rallying. Here is an auto stock that has the potential to rally up to 40%.

Target price of Rs 180 on the stock of Ashok Leyland

Current market price	Target price	Per cent gains likely
Rs 128.85	Rs 180	40%

Sharekhan believes that Ashok Leyland stock can move as high as Rs 180, which implies gains of 40% from current levels.

Economic activity to push growth

With the economy likely to grow, one of the companies to benefit would be Ashok Leyland. We expect Ashok Leyland to be a direct beneficiary of recovery in commercial vehicles sales in domestic markets, led by improving macro environment, higher infrastructure spending, and replacement demand.

We expect the domestic Commercial vehicle industry to post a 22% CAGR from FY2022E-FY2025E, where we expect Ashok Leyland to improve its market share to 20% from current 16%, led by new product launches in LCV and M&HCVs and increasing the distribution network in North and East regions," the brokerage has said.

Electric vehicles to provide impetus

According to the brokerage, Ashok Leyland continues to focus on greener technology with renewed focus on EV products.

"The company's EV subsidiary, SML has made inroads in the UK, India, and Continental Europe. SML is setting up a new advanced manufacturing facility in Valladolid, Spain, which is expected to produce buses in a year's time. The EV subsidiary is looking out for partners and strategic investors, which will put growth on faster track," Sharekhan has said.

About Ashok Leyland

Ashok Leyland 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. The company has 9 manufacturing plants gives an international footprint - 7 in India, a bus manufacturing facility in Ras Al Khaimah (UAE), one at Leeds, United Kingdom and a joint venture with the Alteams Group for the manufacture of high-press die-casting extruded aluminum components for the automotive and telecommunications sectors. Ashok Leyland has a well-diversified portfolio across the automobile industry. Ashok Leyland has recently been ranked as 34th best brand in India.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.