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Ashok Leyland soars 6%, hits new high on healthy Q4 operational performance

Ashok Leyland stock price: Demand momentum in domestic market continues to remain healthy, led by pick-up in replacement demand

Ashok Leyland truck

SI Reporter Mumbai

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Ashok Leyland stock hits record high: Shares of Ashok Leyland hit a record high of Rs 222.80, ralling 6 per cent on the BSE in Monday's intraday trade, amid heavy volumes, after the company reported a healthy operational performance in the March quarter (Q4FY24) with reported earnings before interest, tax, depreciation, and amortisation (Ebitda) margin improving to 14.1 per cent from 11.0 per cent in Q4FY23.

The company's profit after tax (PAT) jumped 19.8 per cent year-on-year (Y-o-Y) at Rs 900 crore as against Rs 751 crore in the year-ago quarter. However, operating income was down 3 per cent Y-o-Y at Rs 11,277 crore, amid 6 per cent de-growth in volumes to 56,267 units.

Cash flow generation for the year was robust at around Rs 4,000 crore, resulting in the company turning net cash positive on the balance sheet front. The company said it generated Rs 1,658 crore cash in Q4FY24.

The management said the results were backed by an all-round performance with contributions from all business verticals. In the medium and heavy commercial vehicles (M&HCV) Bus segment, Ashok Leyland emerged as the market leader with a market share gain of 5.8 per cent points.

Overall commercial vehicles (CV) volumes at 194,553 units were very close to the previous high of 197,366. Light commercial vehicles (LCV) volumes in the 2-3.5T category were maintained despite the industry witnessing a reduction in volumes.

"Export volumes for the year grew 5 per cent despite challenging conditions in target markets. The Power Solutions and Defence Businesses also posted impressive growth," the management said.

ICICI Securities said the management commentary was positive on the demand prospects (especially from the replacement fleet operators); However, it refrained from giving any industry volume growth guidance for FY25.

"In the interim, however, it shall work on internal cost efficiencies with the overall aim at mid-teens Ebitda margin profile. On the EV buses front, it still has a healthy executable order book with Switch Mobility India turning Ebitda positive for the quarter. With uncertain demand outlook by industry players and stock witnessing decent run up in the last one month, we now have a neutral view on the stock," the brokerage firm said.

Meanwhile, analysts at JM Financial Institutional Securities maintain a 'buy' rating on Ashok Leyland with a Mar’25 target price of Rs 275 (20x fwd. EPS).

Demand momentum in the domestic market continues to remain healthy led by pick-up in replacement demand. The company re-iterated its focus on profitable growth. Medium-term demand drivers (higher infra spends, scrappage policy, etc.) remain intact and AL aims for higher share in MHCVs (to c.35 per cent) and LCV led by network expansion and addressing product gaps. Benign commodity cost and astute cost control initiatives are expected to support profitability, the brokerage firm said in a result update.

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First Published: May 27 2024 | 12:09 PM IST

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