Motilal Oswal continues to bet big on this automobile stock; CEO Aashish Somaiyaa’s take on axle load norms

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Published: July 18, 2018 4:58:15 PM

"We continue to hold and we continue to remain bullish actually. So, we have not made any changes in our portfolios," Somaiyaa said about Ashok Leyland stock.

Aashish Somaiyaa said Motilal Oswal continues to hold and will remain bullish on this stock.

Ashok Leyland Share: Despite reporting stellar Q1 results, shares of Ashok Leyland tumbled to a 5-month low on Wednesday. Even though the stock performed its worst on the domestic bourses, one of India’s top brokerages maintained bullishness on the company. “One of our funds definitely owns Ashok Leyland. We owned it well before the result came. We still continue to own it. I think the result was very good. It was in line with expectation and by some people measurement it was better than expected,” Aashish Somaiyaa, CEO of Motilal Oswal Asset Management Company, told CNBC TV18 in an interview.

Somaiyaa, however, was of the view that the new truck axle norms were still not clear enough and its impact on the stock was yet to be assessed. “This extra loading has kind of put a spanner in the works. There is not enough clarity on what that extra loading means and how it will be measured and what are the penalties etc. not much clear on the implementation. We continue to hold and we continue to remain bullish actually. So, we have not made any changes in our portfolios,” Somaiyaa said.

On Wednesday, Ashok Leyland shares plunged nearly 15% to a 5-month low of Rs 109.30 on the National Stock Exchange. The share has fallen has fallen nearly 30% from its 52-week high of Rs 168 touched on May 8, 2018. Its 52-week low stands at Rs 98.80.

Notably, Ashok Leyland on Tuesday posted more than 3 times rise in net profit to Rs 370 crore as compared to Rs 111.2 crore reported in same period last year, backed by robust revenue as well as operational performance. The company’s revenue from operations grew by more than 46.5% on-year to Rs 6,250 crore, it said in a regulatory filing to the BSE.

“The Total Industry Volume registered 84% growth primarily driven by surge in infrastructure spend resulting in higher sale of Tipper and MAVs. There was also the impact of base effect. We continued our focus on profitable growth and tight control on working capital, in a market which operated on heavy discounting and credit push. He further added, despite pressure on realization and raw material price increases, I am happy that we continue to post growth with profitability,” Vinod K. Dasari, Managing Director, Ashok Leyland Limited, was quoted in the filing as saying.

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