Ashoke Leyland: 91-88 May Be A Good Demand Zone For Nr. Term Tgt Of 103-113; STU Orders For 3600 Buses in FY-17 May Help

Trading/Investment Idea: ASL

CMP: 93

Buy around 93-92 OR in dips around 88-86;

TGT: 97-103*-108-113 (1-3M)

TSL< 91 OR < 84

Note: Consecutive closing (3 days) below 84 for any reason, ASL may further fall up to 81-77* & 70-60 in the near to long term (alternative bear case scenario).

Although the initial phase of high demand from the replacement market is moderating, ASL management is confident about maintaining growth in the MHCV segment. 

ASL is in the process to expand its network, launching new products and other customer centric initiatives with an eye on export and defence sectors.

ASL has got orders from various state transport undertakings (STU) for 3600 buses, which will be executed in various phases by FY-17 and may help the co in maintaining its leadership position in the buses segment.

But, in the longer term, we need to see a sustained economic recovery, real upticks in IIP for the expected growth in the MHCV segment.

For ASL (Consolidated):

Q4FY16 TTM EPS: 3.76

Projected FWD EPS:4.40-5.20 (FY:17-18)

Average PE: 25

Current & Projected Fair Valuation May Be Around: 94-110-130 

(FY:16/TTM & FY:17-18/FWD)

Analytical Charts:

Article Courtesy: Frontiza.com