ASHOKLEY - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.8

Let’s break down Ashok Leyland Ltd. (ASHOKLEY) — one of India’s heavyweights in the commercial vehicle segment, posting stellar ROE and profit momentum but held back by high leverage and valuation overhang.

💼 Core Financial Analysis

Profitability & Returns

EPS: ₹5.29, ROE: 28.8%, ROCE: 14.3% — standout ROE fueled by operating leverage and improved sales mix.

PAT Growth: +33.6% QoQ — impressive uptick, signaling demand recovery and efficiency improvements.

Dividend Yield: 2.53% — attractive for steady cash flow seekers.

Leverage Concerns

Debt-to-Equity: 4.08 — red flag; aggressive leverage needs monitoring.

While not uncommon in capital-intensive sectors, it introduces refinancing and rate-risk pressure.

📊 Valuation Metrics

Metric Value Viewpoint

P/E Ratio 23.7 Discount to Industry PE: 34.7 — valuation room exists

P/B Ratio ~5.91 Price rich vs Book Value ₹20.8

PEG Ratio 0.13 ✅ Very attractive; indicates undervaluation vs growth

Intrinsic Value ❌ Slightly Below CMP May cap upside in near-term unless earnings surge continues

🧠 Business Model & Strategic Edge

A top player in medium & heavy commercial vehicles, with a strong brand across domestic and global markets.

Expansion in EVs, defense mobility, and export channels adds long-term optionality.

Integrated manufacturing and product innovation (like modular trucks) are core differentiators.

Institutional trends

FII ↑ 0.52% — growing foreign confidence.

DII ↓ 0.45% — mild caution likely tied to debt metrics.

📉 Technical Indicators

RSI: 50.6 — balanced momentum; no strong bias.

MACD: +0.49 — mild bullish signal, trend improving.

CMP ₹123 trades just above DMA 50 & DMA 200, indicating a stable base.

Currently ~7% off 52W high ₹132 — limited upside unless rerating triggers.

🎯 Entry Zone & Long-Term View

Suggested Entry Zone: ₹110–₹117 — preferable on broader market dips or consolidation.

Long-Term Thesis

Best suited for cyclical upturns in infra and logistics.

If debt is controlled and EV transition gains traction, potential rerating is likely.

Monitor freight demand, input cost trends, and competitive intensity from Tata Motors and others.

Would you like a crisp comparison against peers like Tata Motors, Eicher Motors, or SML Isuzu to triangulate efficiency, valuation, and margin outlook? I can chart that in a clean matrix if you’re evaluating sector picks 📊🚚.

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