ASHOKLEY

Ashok Leyland’s (AL) 1Q PAT stood at INR5.9b, marginally ahead of our estimate of INR5.8b, led by a slight beat on margins (30bp) and higher other income. Its margins expanded 50bp YoY to 11.1% despite subdued demand, led by a healthy non-CV mix in ***** the years, AL has effectively reduced its business cyclicality by focusing on non-MHCV segments. Its continued emphasis on margin expansion is expected to support stronger returns in the long run. Further, a net cash position will enable AL to invest in growth avenues in the coming years. We reiterate our BUY rating with a TP of INR141 (based on 11x June27E EV/EBITDA + ~INR10/sh for NBFC).