Edelweiss' research report on Ashok Leyland
We recently attended Ashok Leyland’s (AL) global conference, which reinforced our positive stance on the company as: (1) management guided for growth in FY19/20 & expects the shift towards higher tonnage vehicles to sustain; (2) focused strategy on exports/spare parts yielding results—up >30% in FY18; (3) product launches across categories.
Outlook
Our recent channel checks in South India (refer report: Road trip to South India: Replacement demand drives M&HCVs) validate our thesis. We maintain ‘BUY/SO’ with SOTP-based TP of INR175 (11x FY20E EV/EBIDT and INR8 for finance business). At CMP, the stock trades at 18.5x FY20E PER.For all recommendations report, click here
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