Deutsche Bank Holds 'Buy' Rating on Ashok Leyland, Forecasts Continued Growth for Industry
Published On Apr 01, 2016
Deutsche Bank has maintained its 'buy' rating on Ashok Leyland, while hiking its target price by 28 percent to INR 125. The move comes following a rise in the company's earnings per share forecasts by around 10 percent.
“Ashok Leyland's market share has improved from 26 percent in FY14 to 33 percent in FY16, and we expect the momentum sustain,” the brokerage firm said. According to the firm, a high demand for replacement had helped to drive Ashok Leyland's growth, and had helped it to recover from a prolonged market stagnation. The bank also said that volume recovery that was below expectations and declines in market share contribute to downside risks.
Around noon, the stocks of Ashok Leyland were priced at INR 108.00, having slipped by 0.09 percent. The share value had previously touched its 52-week high of INR 109, thought to be an effect of Hinduja Leyland Finance filing for IPO papers with SEBI.
The brokerage has a positive view of Ashok Leyland and its current market position, crediting its success to increasing truck sales volumes and consistent gains in the market share.
The Indian commercial vehicle market has grown by nearly 29 percent on a year-to-date basis this fiscal year. The industry has stayed ahead of predicted figures. Deutsche expects this strong growth to continue for the next few years. However, a decline in demand has been witnessed this fiscal, as a result of which, the bank foresees sales growth to reach its peak only in fiscal year '19.