Ashok Leyland - MHCVs decline by 18.8% YoY to 5,251 - Motilal Oswal

- Ashok Leyland Apr-13 volumes declined by 13.8% YoY (-46.6% MoM) to 7,487 (v/s est 8,686 units).

- MHCVs registered a decline of 18.8% YoY (-45.8% MoM) to 5,251 units (v/s est 5,821 units) as weak economic growth impact freight availability and transporters profitability. We estimate 6% growth in FY14 MHCV volumes.

- Dost (LCV) sales at 2,236 units (v/s est 3,250 units), a growth of 1% YoY. We estimate DOST volumes of 50,000 units in FY14.

- With expected improvement in macro-economic environment, we expect MHCV industry to recover in 2HFY14/FY15. AL, being pure play and second largest CV player in India, is the best bet to play expected improvement in CV cycle.

- The stock trades at 13.4x/9.3x FY14E/FY15E earnings of INR1.7/2.5 respectively. Maintain Buy.

Source : Equity Bulls

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