Shares of commercial vehicle maker Ashok Leyland rallied over 8 percent on Tuesday to hit a 52-week high of Rs 133 in early trade. The shares gained after the commercial vehicle maker registered strong growth in January sales and the government’s announcement on vehicle scrappage policy in the Union Budget 2021-2022.
The company’s total sales in January 2021 rose 11 percent to 13,126 units as against 11,850 units sold in January 2020.
Total domestic sales during the month increased 14 percent to 12,359 units from 10,850 units, YoY.
The light commercial vehicle sales jumped 40 percent at to 5,752 units from 4,096 units, while total M&HCV sales declined 5 percent to 7,374 units from 7,754 units, YoY.
Finance Minister Nirmala Sitharaman in her Union Budget 2021 proposals on Monday announced the voluntary scrappage policy to replace personal vehicles older than 20 years and commercial vehicles older than 15 years.
Analysts expect this move to benefit the commercial vehicle segment more as it is likely to lead to higher vehicle sales.
Global brokerage Morgan Stanley maintained an overweight call on Ashok Leyland stock and raised the target price to Rs 155 per share from Rs 63 earlier as it is of the view that all signs point to an M&HCV upcycle and stock is pricing in CV normalisation.
Driven by the budget-led infra push and better pricing, earnings face upside surprise, while scrappage policy could add upside, the brokerage house said.
At 11:50 am, the shared of Ashok Leyland traded 6.75 percent higher at Rs 130.50 apiece on the BSE as compared to a 1.65 percent gain in the benchmark Sensex.
(Edited by : Ajay Vaishnav)
