Ashok Leyland - Demand Recovery Critical, Coupled With Ramp-Up In LCVs, Exports: Motilal Oswal

Workers weld the cab of a vehicle on an Ashok Leyland Ltd. production line in Hosur, India. (Photographer: Rogan Macdonald/Bloomberg News)

Ashok Leyland - Demand Recovery Critical, Coupled With Ramp-Up In LCVs, Exports: Motilal Oswal

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Motilal Oswal Report

Ashok Leyland Ltd. is the second largest manufacturer of commercial vehicles in India and third/ 10th largest manufacturer of buses/trucks in the world, respectively.

The company faced challenges related to weak demand in Q1 FY22.

This time around, rural demand is low, but the management expects a rebound on the back of strong farm fundamentals.

We expect demand recovery in CVs to sustain and gain momentum in FY22E.

With recovery expected in FY22E/FY23E, on a low base of FY21, we estimate domestic medium and heavy commercial vehicle volumes to recover to FY20 levels in FY22E and exceed the peak volumes of FY19 in FY24E.

Light commercial vehicle demand is likely to be aided by the e-commerce channel.

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Motilal Oswal InvestmentIdea Ashok Leyland.pdf


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