Ashok Leyland share price rises 6% to 52-week high. UBS upgrades the stock. Should you Buy, Sell or Hold post Q1

Stock Market today: Ashok Leyland Share price gained more than 6% in morning trades on Friday to 52 week highs.

Ashok Leyland share price that opened at ₹235.10 on Friday on the NSE, slightly higher than previous close of ₹232.43 , however gained further steam thereafter. Ashok Leyland share price touched 52-week highs of ₹248.20 marking intraday gains of more than 6%.

Ashok Leyland had declared Q1 financial performance on Thursday. UBS Research has upgraded the stock fueling gains for the Ashok Leyland share price.

UBS upgrades

UBS Research in its report dated 25 July said that "We upgrade Ashok Leyland from Neutral to Buy considering the resilience in MHCV (Medium and Heavy Commercial Vehicles) demand, a strong pricing environment and favorable valuation. As per UBS Research Ashok Leyland share price it is trading in line with the past five-year mean while most OEMs (original equipment manufacturers) are trading at valuations that are around 3SD (standard deviation) above.

Q1 Volume growth

Ashok Leyland had reported Q1 earnings on Thursday. Ashok Leyland’s domestic MHCV volume grew by 8 % year on year and the company highlighted that its market share was at 30.7 %. The bus market share was significantly up at 33.3%. Ashok Leyland’s LCV volume in Q1 FY’25 was 15345 units, 4% higher than Q1 of last year (14821 units). The Company’s Export volume in Q1 FY’25 was 2324 units, 5% higher than Q1 of last year (2222 units).

Realisations soften

Ashok Leyland earnings performance as per analysts saw impact of lower realisations even though volume growth was strong. Analysts at Jefferies India Ltd said that the per vehicle realisations at ₹1981,000 per vehicle was 1% lower year on year and 2% lower sequentially.

Ashok Leyland's Q1 Earnings before interest, tax, depreciation and amortisation (Ebitda) grew 11% YoY, but was 11% below Jefferies estimates. EBITDA margin rose 60 bps YoY to 10.6%, but fell 350bp sequentially on adverse operating leverage. Q1 net profit there rose 16% YoY but was 3% below Jefferies estimates.

Ashok Leyland bullish on Demand environment

Ashok Leyland' in its release said that it continued to see strong demand in all its business units. While Ashok Leyland' achieved its highest ever First quarter commercial Vehicle volumes, the Power Solutions, Aftermarket, Defence business and the International Operations also contributed strongly to the top line. The efforts on product and network expansion helped the uptick in revenue and market share

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