Ashok Leyland: "Smooth ride ahead" – BUY
CMP Rs72, Target Rs83, Upside 14.6%
Commercial vehicle (CV) volumes jumped 33% in FY10. This momentum is bound to continue considering recent trends in industrial activity, rise in infrastructure focus and better finance availability. Amidst this scenario, we expect Ashok Leyland to gain market share. Operating margins will remain resilient over the medium term owing to strong pricing power, stability in commodity prices and higher production from Uttarakhand plant. With a PAT CAGR of 36% during FY10-12E, we believe the stock is trading attractive at a P/E of 12.2x FY12E EPS of Rs5.9. Reiterate BUY with a target price of Rs83.
http://content.indiainfoline.com/wc/research/researchreports/Ashok_Leyland_300810.pdf
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