Ashok Leyland, extends gains, hits new high

Ashok Leyland (ALL) hit a new high of Rs 145, up 2.5%, extending its previous day’s 1% gain on the BSE in otherwise subdued Market. Hinduja Group flagship ALL has outperformed the market by gaining 8% in past one month, as compared to 3.6% decline in the S&P BSE Sensex.

The company’s net profit jumped almost three-fold to Rs 4.49 billion in Q3 from Rs 1.61 billion in the same period a year earlier, overtaking analysts’ estimates of Rs 4 billion. Despite an increase in raw material costs, which surged 58% to Rs 54.06 billion from Rs 34.02 billion a year earlier, and high discounts on vehicles continuing, ALL improved its operating profit margin by 100 basis points, both year-on-year and sequentially, to 11.1% in the third quarter of FY18.

Angel Broking initiates coverage on the stock with a Buy recommendation and 12 month target price of Rs 163.