Is it right time to Invest in Ashok Leyland ?

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Ashok Leyland shares have seen a sharp correction in last 9 months and almost halved during this period. In June 2018 this stock has touched its life time high ₹ 165 and then it starts to fall continuously and came down to ₹ 79. I am holding this stock when it was trading at ₹ 13. Ashok Leyland stocks have witnessed their worst days in last 9 months. Now every investor keen to know whether this stock may see some further correction or witness some up movements. Lets discuss the strength and challenges before this company.

Strength : 

  1. Leader in domestic market : Ashok Leyland is second largest commercial vehicle manufacturer in India. This company has maintained leadership in heavy and commercial vehicles in domestic market . Ashok Leyland manufacture all categories of trucks (6.5 tons to 49 tons) and buses (10 seater to 74 seater) with a market share of almost 32%  in this category. This company has emerged as the leader in the category giving tough competition to Tata Motors and Mahindra and Mahindra.
  2. Strong presence in global market : Ashok Leyland has also emerged as the leader in global market. This Chennai based company is 4th largest bus manufacturer and 10th largest truck manufacturer in the world. Ashok Leyland has strong presence in European, African and Asian countries. Apart from this it has also significant market share in US market.
  3. Entry in new segments: Ashok Leyland has also started manufacturing electric buses. Ashok Leyland has become first company starting double Decker electric bus in London. Company is working to grab a significant market share in global electric buses.
  4. Growth and Expansion plan: Ashok Leyland has announced to Spent Rs. 1,000 crores on growth and expansion of company to meet the demand and to grab the opportunities. Company has already announced to launch more than 20 variants in heavy passenger and commercial vehicles.
  5. Partnership: Ashok Leyland is continuously working on gaining market share and technology up gradation and for the purpose, it has entered in to agreement with many foreign companies and institutions. Company is also working on manufacturing all the spare parts to be self dependent in partnership with other firms.

Challenges: 

  • Aggressive move by Tata motors: Ashok Leyland is facing tough competition from Tata Motors. Tata motors the closest competitor of Ashok Leyland and Largest manufacturer of heavy passenger and commercial vehicles has adopted an aggressive strategy to gain market share in domestic and global market. Definitely due to closest rival share of Ashok Leyland will affected.
  •  New Axle norms: After announcing new axle norms by government Ashok Leyland stocks are falling. There would be a negative impact on the sale of trucks and other commercial vehicles after new axle norms. Being the leader in commercial vehicle segment Ashok Leyland may witness a fall in sale.

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