Shares of Ashok Leyland gained 6.6% on Friday’s early trades to reach an intraday high of ₹ 167.80 apiece on the National Stock Exchange (NSE). Its share price was marginally away from its 52-week high of ₹ 169.45 apiece. At 01:32 PM, its shares were trading at ₹ 165.05 apiece, up 4.89%.
Ashok Leyland is the flagship Company of the Hinduja group, with a long-standing presence in the domestic Medium and Heavy Commercial Vehicle (MHCV) segment. The company has a strong brand and well-diversified distribution and service network across the country and has a presence in 50 countries, it is one of the most fully-integrated manufacturing companies.
The MHCV manufacturer in its annual investor meeting expressed confidence in nearly tripling its defence business revenue over the next three years. It said that its defence business is likely to fetch an annual revenue of ₹ 1,100 crores over the next three years, against ₹ 400 crores fetched over the last five years. It expressed confidence that the commercial vehicle upcycle will continue and that it expects its export volumes to double over the next two to three years.
Moreover, the company said that it plans on increasing its domestic market share to 35 percent from the current 32 percent and its LCV market share to 25 percent from 19 percent. The company expects its EBITDA margin to be in the mid-teens from the current level of 8.1 percent.
Moving forward, the company plans to unlock value through its subsidiaries. This begins with the IPO of Hinduja Leyland Finance which is expected to happen in the second half of the current financial year.
Ashok Leyland is a mid-cap company with a market capitalization of ₹ 46,200 crores. It has an ideal return on equity of 15.65% and a dividend yield of 1.65%. Its shares were trading at a price-to-earnings ratio of 37.20 which is higher than the industry average of 26.93, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 51.53% stake in it, followed by foreign institutions with 14.85%, mutual funds with 14.52%, retail investors with 13.20% and other domestic institutions with 5.90%.
Written By Simran Bafna
