CLSA Continues Being Bearish On Ashok Leyland Stock

CLSA Continues Being Bearish On Ashok Leyland Stock
Nov 20, 2018 |
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CLSA has maintained its sell rating for the Ashok Leyland stock in India, giving a target price of Rs. 100 for the troubled stock. CLSA is a popular capital markets and investments group, based in Hong Kong. The rating firm has cited concern on truck demand, new axle loading norms and financing issues at NBFCs to be the primary reasons behind its bearish outlook.

In an official statement, CLSA mentioned, "We remain concerned on truck demand given that the industry is already in the fifth year of upcycle, while the recent increase in axle loading norms and financing issues at NBFCs have further clouded industry outlook.” The rating firm further added that “Competitive intensity is also likely to rise if demand slows down, which would have an impact on margins."

Ashok Leyland’s share price recently suffered a massive setback after news of CEO and MD Vinod Dasari stepping down from his post came into light. Though Mr. Dasari’s decision is said to be driven by personal reasons, it resulted in a 9 percent drop in Ashok Leyland’s share price. Interestingly, the company recently announced its quarterly results and recorded 37 per cent YoY increase in its standalone net profit at Rs 460 crore.

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