The shares of leading commercial vehicle manufacturers gained up to 1.6 percent after a well-known brokerage recommended a ‘Buy’ rating.
With a market capitalization of Rs 51,147.34 crores, the shares of Ashok Leyland Ltd were trading at Rs 174.20 per share, increasing around 1.31 percent compared to the previous closing price of Rs 171.95 per share.
Looking into Ashok Leyland Ltd’s performance, revenue increased by 19 percent from Rs 9,600 crore in Q2 FY23 to Rs 11,429 crore in Q2 FY24. During the same period, net profit increased by 206 percent, from Rs 186 crore to Rs 569 crore.
Credit Lyonnais Securities Asia (CLSA), Asia’s well-known brokerage, gave a ‘Buy’ call on the automobile stock with a target price of Rs 238, indicating a potential upside of 36 percent from Tuesday’s price of Rs 174.20 per share.
Here is the reason behind the potential upside target:
● The company is showing another 6-10 percent year-on-year (YoY) growth in heavy truck volumes.
● Strong freight rates, double-digit increases in freight rates, and rising e-way bills are all signs that the commercial vehicle (CV) upcycle is expected to continue.
● In November of last year, the total number of light commercial vehicles sold in the domestic and international markets increased by 9%, from 5,087 to 5,553 units.
● Sales totals through November 2023 increased by 7% to 1.2 lakh units from 1.1 lakh units sold in the same month the previous year.
● At EXCON, Ashok Leyland unveiled other cutting-edge products, including the AL H6 Diesel – CEV Stage V engine.
The company has sold 114,247 Medium and Heavy commercial vehicles in the domestic market comprising 10,767 buses and 103,480 trucks including Defence vehicles, registering a growth of 75.5 percent. In the M&HCV Bus and Truck segment, the company was able to secure a market share of 31.8 percent, representing a 4.7% increase from the previous year.
When it comes to revenue from the geographic segment, the company’s revenue in India increased by 62 percent, from Rs 23,412.63 crore in FY2021–22 to Rs 38,039.01 crore in FY2022–23, while revenue from outside of India increased by 28 percent from Rs 2,824.52 crore in FY2021-22 to Rs 3,633.59 crore in FY2022-23.
The Hinduja group’s company, Ashok Leyland, has a long history in the domestic medium and heavy commercial vehicle (M&HCV) market.
Written by:- Abhishek Singh
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