Ashok Leyland rises on strong management commentary; here's what Anil Singhvi recommends

Ashok Leyland shares approached a 52-week high on Friday after the auto major's management delivered robust commentary on its business outlook.

Ashok Leyland's management made robust commentary in a meeting with investors on Thursday - Image Source: Reuters

Ashok Leyland shares were in high demand on Friday as investors cheered the commercial vehicle maker’s strong business outlook. The stock of Ashok Leyland – a Hinduja group company – gained as much as seven per cent to Rs 167.8 apiece on BSE. The stock is trading near its 52-week level of Rs 169.4 per share, touched on June 09, 2022.

Key takeaways from Ashok Leyland investors' meet:

The company's management made robust commentary in a meeting with investors. Here are some highlights:

Ashok Leyland aspires to grow profitably in the domestic medium and heavy commercial vehicle (M&HCV) market
It aims to expand its non-M&HCV revenue at a faster pace
It showcased an inflection point for Switch Mobility (EVs) as it prepares to launch six platforms in two years
Management expects the ongoing uptrend in M&CHVs to continue, with the company focusing on increasing market share by three percentage points to 35 per cent
It aims to expand its play in LCVs to increase its market share substantially
Management has guided for a double-digit EBITDA margin in 2023-24, a mid-teens EBITDA margin in medium term

Anil Singhvi is positive on Ashok Leyland

Zee Business Managing Editor Anil Singhvi named Ashok Leyland Futures as the stock of the day after the company's strong management commentary. He recommended buying the stock stock with a stop loss at Rs 155 apiece for targets of Rs 162 and Rs 164.

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Singhvi highlighted the company's aim to gain market share in commercial vehicles and improvement in margins, which he believes may continue going forward.

What should investors do?

On the back of strong commentary, most global brokerages are bullish on the Ashok Leyland shares. Morgan Stanley and JPMorgan each have an ‘overweight’ rating on Ashok Leyland.

Brokerage	Rating	Price Target
Morgan Stanley	Overweight	Rs 178
JPMorgan	Overweight	Rs 175
UBS	Neutral	Rs 175
Goldman Sachs	Neutral	Rs 155
Nomura	Buy	Rs 187
Motilal Oswal	Buy	Rs 180

The demand environment is expected to remain stable, supported by improving pricing power and steady raw material prices, which will drive strong earnings, according to Motilal Oswal Financial Services.

Ashok Leyland is the best investment choice in the CV growth cycle, as it has positioned itself to expand revenue/profit pools, the brokerage added.

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