PL First Cut - Ashok Leyland - 1QFY24

PL First Cut – Ashok Leyland – *Himanshu Singh – Research Analyst, Prabhudas Lilladher Pvt Ltd*

Ashok Leyland [AL IN| TP: INR215 | BUY]

1QFY24 First-cut

Overall, strong set of numbers on both revenue and margins, beating our and street’s consensus estimates. The CV industry has been aiming for profitable growth since the 2HFY23, when Tata Motors started reducing discounts offered. This has led to improvement in margins across CV OEMs. AL was targeting to reach double digit margins in FY24, which it has achieved in 1QFY24 itself, which gives us confidence in its medium term margin targets of reaching mid-teen. The stock current trades at 19.5x FY25 PE. AL has noted that demand should improve from 2QFY24 onwards as 1Q volume performance was impacted due to pre-buying in 4QFY23 ahead of transition to BS VI OBD 2 norms.

Revenue de-grew QoQ by -29.6% to Rs. 82bn, grew YoY by 13.4%, and higher vs PLe by 3.1%

EBITDA de-grew QoQ by -35.7% to Rs. 08bn, grew YoY by 156.2%, and higher vs PLe by 41.6%

APAT de-grew QoQ by -19.2% to Rs. 06bn, grew YoY by 863.5%, and higher vs PLe by 129.9%

EBITDA margin contracted QoQ by -95 bps to 10.0%, expanded YoY by 559 bps, and higher vs PLe by 272bps

Revenue per unit was flattish QoQ by 1.7%, grew YoY by 8.8%, and grew vs PLe at 3.1%

EBITDA per unit de-grew QoQ by -7.1%, grew YoY by 145.9%, and grew vs PLe at 41.6%