ASHOKLEY - Investment Analysis

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

Investment Rating: 4.2

📊 Fundamental Analysis Summary

Ashok Leyland (ASHOKLEY), a major commercial vehicle manufacturer, presents a compelling case for long-term investment with strong ROE, attractive PEG ratio, and a healthy dividend yield. While its debt-to-equity ratio is high, this is typical for capital-intensive industries and currently offset by robust earnings growth and improving margins. The valuation is reasonable, and technical indicators suggest a consolidation phase with potential upside.

Metric Value Interpretation

P/E Ratio 23.7 Reasonable — below industry average

PEG Ratio 0.13 Very attractive — significantly undervalued relative to growth

ROE / ROCE 28.8% / 14.3% Strong ROE — excellent profitability; ROCE moderate

Dividend Yield 2.53% Attractive — adds income potential

Debt-to-Equity 4.08 High — leverage risk, but manageable given earnings strength

EPS ₹5.29 Modest — supports valuation

PAT Growth (QoQ) +56.4% Strong — earnings momentum intact

Book Value ₹20.8 Price-to-book ~5.9× — high, but justified by ROE

RSI / MACD 50.6 / +0.49 Neutral — consolidation phase

DMA 50 / 200 ₹121 / ₹114 Price above both — bullish trend

52W Price Range ₹95.2 – ₹132 Currently at 75.6% of 52W high — room for upside

FII/DII Change +0.52% / -0.45% Mixed — slight FII interest, DII trimming

📉 Ideal Entry Price Zone

Entry Zone: ₹115 – ₹120

Near DMA levels and RSI neutral — good accumulation zone.

Avoid chasing above ₹125 unless earnings continue to accelerate.

🧭 Exit Strategy & Holding Period

Holding Period

5+ years — ideal for long-term compounding through cyclical recovery and infrastructure growth.

Exit Strategy

Exit partially if PEG rises above 1.0 or ROE drops below 20%.

Consider trimming if price exceeds ₹130–₹135 without matching EPS or PAT growth.

Key Metrics to Monitor

ROE consistently above 25%

PEG ratio staying below 0.5

PAT growth > 20% YoY

Debt-to-equity trending below 3.5

🧠 Final Thoughts

Ashok Leyland is a strong cyclical play with excellent ROE, undervaluation based on PEG, and a solid dividend yield. While debt levels are high, the company’s earnings momentum and sector tailwinds make it a promising long-term candidate. Ideal for investors seeking exposure to commercial vehicles and infrastructure-led growth with a disciplined entry and monitoring strategy.

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