Ashok Leyland finds growth triggers in the rising demand for M&HCVs

What could also add to revenues and margins of Ashok Leyland are exports, which currently constitute 10 per cent of revenues, and sales to the defence sector

Strong volume growth in recent months and improvement in product mix has led analysts to upgrade their volume, revenue and margin estimates for Ashok Leyland. The company, which is the only pure-play listed player with an exposure to the high-growth medium and heavy commercial vehicle (M&HCV) segment, should see higher gains given the shift in customer preference towards the more profitable higher-tonnage CVs. Given this backdrop, investors with a two-year horizon can consider adding the stock, which currently trades at 18 times its FY19 estimates.

Volumes surge, market share up

The recent trigger has been the 79 per cent year-on-year