AL's focus is on preserving cash over the short term and reducing volatility/growing business over the long term.
The company is BS6-ready with differentiated solutions.
LCV business appears set to expand in the addressable market
Exports business promise is likely to get realized with a relevant and wider product portfolio for the first time.
Domestic M&HCV volumes appear to have bottomed out, and systemic inventory is now very comfortable. Green shoots are visible, although it is difficult to ascertain the timing of a sustainable volumes recovery.
Although the worst appears to be over for the CV industry, volumes are likely to remain volatile due to the upcoming BS6 transition. Unlike in the previous cycles, AL is on a very strong footing. Valuations at ~22.7x FY21E EPS and ~11.5x EV/EBITDA are reasonable in view of early recovery cycle earnings
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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