ASHOKLEY - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.5

📊 Core Financials Breakdown

Profitability

ROE of 31.4% and ROCE of 36.5% are outstanding — well above industry norms, signaling strong capital efficiency.

EPS of ₹5.74 is decent, though the sharp drop in quarterly PAT from ₹1,255 Cr to ₹594 Cr warrants monitoring.

Leverage & Cash Flow

Debt-to-equity ratio of 0.13 reflects a conservative capital structure — very low leverage.

Dividend yield of 2.25% is attractive for a cyclical stock, indicating healthy cash flows.

Growth

Quarterly profit variation of +13% suggests resilience despite the recent earnings dip.

📉 Valuation Metrics

Metric Value Commentary

P/E Ratio 24.7 Below industry average (37.3) — undervalued

P/B Ratio ~7.09 High premium to book value ₹19.6

PEG Ratio 0.06 Extremely low — implies strong growth at modest valuation

Intrinsic Value ₹150–160 Current price slightly below fair value zone

🏢 Business Model & Competitive Edge

Sector: Ashok Leyland is a dominant player in commercial vehicles, especially buses and trucks.

Moat: Deep dealer network, strong brand equity, and government contracts (e.g., electric buses for urban transport)

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Innovation: Active in EVs and smart mobility solutions via OHM Global Mobility, positioning for future growth

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Ownership Trends: Slight uptick in FII holding (+0.52%) but mild DII reduction (-0.45%) — neutral sentiment.

📈 Technical & Entry Guidance

Current Price: ₹139 — near 52-week high of ₹140, suggesting momentum-driven rally.

RSI: 67.6 — approaching overbought zone.

MACD: Positive at 2.87 — bullish momentum.

Entry Zone: ₹125–130 would offer a better margin of safety for long-term investors.

🕰️ Long-Term Holding Outlook

Strengths: Exceptional return metrics, low debt, strong brand, and future-ready initiatives.

Risks: Cyclical nature of CV industry, recent earnings volatility.

Recommendation: Ideal for long-term holding (3–5 years) with potential upside from EV expansion and infra-led demand. Accumulate on dips.

If you'd like, I can break down its EV strategy or compare it with Tata Motors and Eicher.

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shareprice-target.com

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www.sharekhan.com

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