Here’s why Ashok Leyland share price is up 7% in the last month

Shares of leading commercial vehicle manufacturer Ashok Leyland have been on an upward trajectory in recent times. Notably, the shares of the Hinduja Group company have rallied 7% in the last month.

What is leading to this spurt in Ashok Leyland share price recently? Is the rally due to any company specific developments or due to industry tailwinds? Do analysts think the rally in the Ashok Leyland share price is sustainable? Let’s try and decode!

Ashok Leyland share price: Reasons for rally

Upbeat management commentary: The commercial vehicle manufacturing giant recently held its investor day meet. Notably, the optimistic tone of the management at this meeting has been the primary contributor to the recent rally in the Ashok Leyland share price.

Specifically, the company highlighted that it is aiming for a medium-target of 35% and 25% market share in medium and heavy commercial vehicle and light commercial vehicle segments, respectively.

Notably, the company has also aimed to increase its operating profit margins to the mid-teen levels from the current levels of 8.1% in FY23.

Further, the company earmarked plans to increase its EV production and expand its footprint in the exports business. The company expects to double its exports volumes over the next two to three years.

In terms of its defense business, the company aims to triple its annual revenues from about Rs 400 crores currently to Rs 1,100 crores over the next three years.

Decent results: Although Ashok Leyland did not report stellar results in the March quarter, with profits falling 17% from the previous year to Rs 751.41 crore, its results were solid on an overall basis.

While revenues witnessed a yearly rise of 33% to Rs 11,626 crores, operating profits jumped by 64% from the prior year to Rs 1,276 crores in the March quarter. Notably, operating margins expanded by 2.09% from the prior year to 10.97%.

Additionally, a dividend of Rs 2.6 per share also attracted investors to the stock coupled with its solid results.

Exciting tie up: Finally, the recent trigger in the Ashok Leyland share price can be attributed to its partnership with autonomous mobility solutions provider 'Aidrivers'. The company will produce electric terminal trucks for the port industry through this partnership.

However, the company forged this partnership with the motive of meeting its net zero emissions goals.

Notably, this move was appreciated by the investors and was a major contributor to the rally in the Ashok Leyland share price.

Ashok Leyland analyst target price

Prabhudas Lilladher: The renowned domestic brokerage has a “Buy” rating on the stock with a price target of Rs 215. The firm remains optimistic about the company’s future strategies and believes its management is competent enough to achieve its goals.

BNP Paribas: The top domestic brokerage has a “Buy” rating on the stock with a price target of Rs 181. The firm highlighted the company’s focus on improving its margins as a key driver of the Ashok Leyland share price growth in the near term.

Jefferies: The renowned global brokerage firm has a “Buy” rating on the stock with a price target of Rs 195. The firm cited strong truck demand, improving margins, and regaining market share as the main catalysts for the stock's price appreciation. The aggressive strategy of Ashok leyland to increase its market share has also been highlighted by the firm.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.