Ashok Leyland Hits 52-Week High Today; Analysts Predict 19% Potential Gains Ahead

Ashok Leyland Price Today: Shares of Ashok Leyland jumped 3.5 per cent in early trade on June 19 to hit a 52-week high of Rs 170.15 on strong growth outlook. The stock quoted a 52-week high price of Rs 170.15 and a low of Rs 128.35. The return on equity for the stock stood at 14.5 per cent. About 787,851 shares have changed hands on the counter so far.

The stock’s beta value, which measures its volatility in relation to the broader market, stood at 1.55.

The scrip has been an outperformer, up 28.34 per cent in the past one year in comparison with a 16.75 per cent gain in Sensex.

The company, at its Investors’ Day event held on June 15, set forth a medium-term target to achieve 35 percent market share in the medium and heavy commercial vehicle (MHCV) segment, a 25 percent share in light commercial vehicle (LCV) and mid-teen EBITDA (Earnings before interest, taxes, depreciation, and amortization) margin. The company’s EBITDA margin was at 8.1 percent in FY23.

Apart from that, it also plans on expanding its export and defence footprint, and building electric vehicles (EV) and alternate powertrains.

What Should Investors Do Now?

The company’s vast growth plans met with praise from global research and broking firm Jefferies. The firm sees strong demand for trucks, margin improvement and market share recovery as the key upside catalysts for the stock.

Accordingly, Jefferies retained its ‘buy’ call for Ashok Leyland while raising its price target by over 5 percent to Rs 195.

While Jefferies does like Ashok Leyland’s aggressive strategy to expand market share as well as margins in the medium term, it believes achieving both might be tough as Tata Motors would likely defend its franchise too.

Factoring in those assumptions, Jefferies also kept the stock lower in its pecking order despite raising its price target due to its expensive valuations.

Technicals

On the technical charts, the 200-day moving average (DMA) of the stock stood at Rs 128.35 on June 19, while the 50-DMA was at Rs 147.15. If a stock trades well above 50-DMA and 200-DMA, it usually means the immediate trend is upward. On the other hand, if the stock trades well below 50-DMA and 200-DMA both, it is considered a bearish trend and if trades between these averages, then it suggests the stock can go either way.