Ashok Leyland was listed on the NSE on May 25, 1995. In the last five years, the stock has given a massive return of more than 350%. Will Ashok Leyland continue to provide such great returns in the future as well? Let’s explore Ashok Leyland’s growth potential and Ashok Leyland share price target from 2025 to 2050 in this article.
About Ashok Leyland
Ashok Leyland is an Indian automaker that manufactures trucks, buses, and other commercial vehicles. It launched in 1948 and is headquartered in Chennai, India. The company is one of the largest heavy vehicle manufacturers in the country, known for producing tough and dependable trucks and buses. Over time, Ashok Leyland is growing its operations not only in India but also in other countries. It is widely used in the public travel, defence, and buildings. The company focusses on innovation and producing vehicles that meet modern demands while also being fuel efficient and green.
Ashok Leyland Business Model
- Vehicle Sales: Main Income Source Ashok Leyland makes most of its money by selling trucks, buses, and light commercial vehicles.
- Spare Parts and Services: The company sells spare parts and provides maintenance services, which bring in regular income.
- Defense Vehicles: Ashok Leyland supplies special vehicles to the Indian Army and other defense forces.
- Electric and Alternative Fuel Vehicles: The company is investing in electric and CNG vehicles, which will help increase revenue in the future.
- Exports: Ashok Leyland sells vehicles in many other countries, which helps expand its business and earn foreign income.
- Partners and Investments: The company owns and invests in other businesses, such as engine manufacturing and digital solutions.
Ashok Leyland Fundamental Analysis
| Stock Name | Ashok Leyland Ltd. |
|---|---|
| NSE Symbol | ASHOKLEY |
| Market Cap | ₹ 61914 Cr. |
| 52W High | ₹ 265 |
| 52W Low | ₹ 166 |
| Stock P/E | 22.2 |
| Book Value | ₹ 35.1 |
| Dividend Yield | 2.35 % |
| ROCE | 15.0 % |
| ROE | 28.4 |
| Face Value | ₹ 1.00 |
| Shareholders | Mar 2023 | Mar 2024 | Dec 2024 |
|---|---|---|---|
| Promoters | 51.53% | 51.52% | 51.52% |
| FIIs | 14.85% | 21.45% | 24.09% |
| DIIs | 22.15% | 12.23% | 13.04% |
| Government | 0.07% | 0.07% | 0.07% |
| Public | 11.40% | 14.72% | 11.28% |
| No. of Shareholders | 11,18,107 | 14,91,397 | 14,56,048 |
Key Factors Driving Ashok Leyland Future Growth
- Government Support for Buildings: Government projects such as highways and smart cities are increasing demand for heavy vehicles, allowing Ashok Leyland to sell more.
- Electric and Green Vehicles Focus: Ashok Leyland is investing in electric and hybrid vehicles, which will be crucial as pollution regulations contract.
- Building International Markets: Ashok Leyland is increasing its presence in Africa, the Middle East, and Southeast Asia, resulting in higher sales.
- New and Advanced Technology: Ashok Leyland is introducing new engine technology, safety features, and fuel-efficient models to remain successful.
- Strong Dealer and Service Network: Ashok Leyland has a large number of service centres and dealers, making it simple for customers to purchase and maintain vehicles.
- Increasing E-commerce and Logistics Needs: As online shopping becomes more popular, Ashok Leyland’s light and heavy trucks are in high demand to transport goods.
- Partnerships and Purchases: Ashok Leyland partners with other companies and winning new ones to improve its technology and market reach.
- Cost Control and Better Profitability: Ashok Leyland is focusing on saving money, operations, and profit improvement.
- Government Push for Make in India: The government’s Make in India initiative benefits Ashok Leyland because it manufactures vehicles locally, which leads to industry self-reliance.
Pros of Ashok Leyland
- Strong Sales Growth: Ashok Leyland has achieved a strong sales growth of 33% CAGR over the last three years.
- Strong Profit Growth: Ashok Leyland has achieved a strong profit growth of 206% CAGR over the last three years.
- Increase in DIIs Holding: Domestic Institutional Investors (DIIs) have increased their holding to 13.04% in December 2024 from 12.34% in September 2024, which indicates growing confidence in the Ashok Leyland future potential by the DIIs.
Cons of Ashok Leyland
- Low Return on Capital Employed (ROCE): Ashok Leyland 5-year average ROCE is 9.28%, indicating inefficient use of capital to generate profits.
- Overvaluation Concern: Ashok Leyland is trading at a PE ratio of 22.2 and a (P/B) ratio of 6.00, which shows that its stock is significantly overvalued. This high valuation may limit future upside potential and pose a risk of correction if market sentiment changes.
- High Financial Risk: Ashok Leyland has a high debt-to-equity ratio of 4.30, indicating a strong dependency on debt. This increases financial risk, raises interest costs, and may have an impact on profitability.
- High Promoter Pledge: Ashok Leyland promoters have pledged 30.1% of their holding, which can be risky. If they fail to repay their loans, lenders might sell these shares, causing the stock price to fall.
- Decrease in FIIs Holding: Foreign Institutional Investors (FIIs) have reduced their holding to 24.09% in December 2024 from 24.39% in September 2024, indicating a decline in FII’s confidence in the company’s future growth prospects.
| Years | Target Price |
|---|---|
| Ashok Leyland Share Price Target 2025 | ₹263 to ₹330 |
| Ashok Leyland Share Price Target 2026 | ₹315 to ₹425 |
| Ashok Leyland Share Price Target 2027 | ₹380 to ₹550 |
| Ashok Leyland Share Price Target 2028 | ₹450 to ₹720 |
| Ashok Leyland Share Price Target 2029 | ₹590 to ₹930 |
| Ashok Leyland Share Price Target 2030 | ₹710 to ₹1210 |
| Ashok Leyland Share Price Target 2035 | ₹1420 to ₹3640 |
| Ashok Leyland Share Price Target 2040 | ₹2830 to ₹10930 |
| Ashok Leyland Share Price Target 2050 | ₹11340 to ₹65570 |
Conclusion
Ashok Leyland has shown significant growth over the years, delivering impressive returns to investors and expanding its presence in both domestic and international markets. With strong demand for commercial vehicles, government support, a focus on electric and green technology, and increasing e-commerce needs, the company has promising growth potential. However, concerns like high financial risk, overvaluation, and moderate long-term profit growth pose challenges. For the latest updates, you can visit Ashok Leyland official website.
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.