Ashok leyland is a good stock option

Ashok leyland is a good stock option

By Rajiv Kapoor | 17 October, 2015
Ashok Leyland is the second largest commercial vehicle manufacturer in India with a market share of 27% in the heavy truck segment and a share of about 40% in the bus segment. Due to the economic slowdown during FY2012-14, the domestic heavy commercial vehicle industry witnessed a sharp fall in volumes. But, it turned around positively in FY2015 with an absolute growth of 16% . Ashok Leyland Ltd, a Hinduja Group flagship company, reported a 60% increase in total sales of 14,771 units in September against 9,185 units for the same month last year.
The company has lately entered the light commercial vehicle or LCV segment  in a joint venture with Nissan. Judging by the good response, the management is quite bullish in gaining a foothold in the LCV portfolio and expand its market share. With the government’s focus on indigenous manufacture of Defence products plus FDI in this sector, Ashok Leyland expects the Defence business to contribute substantially in the next few years. Analysts expect the good performance to continue on the back of better freight availability due to improving economic activity, increase in governments fund allocation to the road sector and resumption of activity in the mining industry. The Ashok Leyland stock has been on an intermediate uptrend for some time and fund managers are expecting a target price of Rs 130 in the short term. Investors can buy the stock at the current market price of Rs 95 for a decent 25% appreciation in the next 2-3 month time horizon.
In the early trading hour on Friday, the Nifty opened in the red and drifted lower but there was a sharp upward bounce in the Nifty in the second half of the trading session after a positive opening in the European markets. The Nifty reclaimed the 8,200 mark after a gap of two months with the upside led by banking and financials, auto, oil and infrastructure stocks. Nestle came back with positive news after a gap of three tumultuous months with its flagship product Maggi expected to come on shelves soon. The stock rallied 6% with the company announcing that it’s Maggi samples had cleared all lab tests. With global markets in strong territory, the Indian benchmark indices BSE Sensex and NSE Nifty may extend further gains in the near term.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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