Ashok Leyland: A Long-Term Bullish SetupTechnical Analysis:
Ashok Leyland has maintained a robust bullish trend for an extended period. Since 2018, the stock faced significant resistance at the ₹160-₹168 level, which acted as a major barrier from 2016 to 2023. In June 2023, this resistance was decisively broken, turning it into strong support and confirming the continuation of the bullish trend.
In 2024, the stock has consistently respected this support level, reinforcing its strength. Today, the stock recorded a trading volume of 36.51 million, the highest in the past six months. This surge in volume indicates strong buying interest, further confirming the ongoing bullish momentum.
Currently, Ashok Leyland has formed a bull flag pattern, a classic continuation setup suggesting potential upward movement. If the flag breakout occurs, we can anticipate a move equal to the pole height of 88 points.
Target Projections:
• First Target: ₹236
• Second Target: ₹260
• Third Target: ₹300
This analysis is based on the weekly timeframe, signifying a strong long-term investment opportunity.
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Fundamental Analysis:
Ashok Leyland has announced its Q3 FY24 earnings, demonstrating strong financial performance. The company's total revenue for the quarter stands at ₹12,060 crore, reflecting growth from ₹11,262 crore in Q2 FY24 and ₹11,119 crore in Q3 FY23, showcasing consistent upward momentum.
The company’s expenses for Q3 FY24 amounted to ₹10,938 crore, compared to ₹10,314 crore in Q2 FY24 and ₹10,155 crore in Q3 FY23, indicating effective cost management while maintaining growth.
Additionally, the net profit for the quarter reached ₹820 crore, improving from ₹767 crore in Q2 FY24 and ₹609 crore in Q3 FY23, reflecting a strong profitability trend. The Earnings Per Share (EPS) also improved to ₹2.59, compared to ₹2.40 in Q2 FY24 and ₹1.91 in Q3 FY23, reinforcing investor confidence.
Following the strong Q3 results, the stock surged by 7%, with management emphasizing impressive financial performance and industry-leading margins. Furthermore, the company has successfully eliminated its debt, becoming net cash positive, a significant turnaround from past financial challenges.
Management remains optimistic about future quarters, expecting even better performance and robust international growth prospects.
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Key Highlights – Q3 FY24 Financial Performance
Revenue Growth: ₹12,060 Cr in Q3 FY24, up from ₹11,262 Cr in Q2 FY24 and ₹11,119 Cr in Q3 FY23.
Increase in Expenses: ₹10,938 Cr in Q3 FY24, compared to ₹10,314 Cr in Q2 FY24 and ₹10,155 Cr in Q3 FY23.
Net Profit Surge: ₹820 Cr in Q3 FY24, higher than ₹767 Cr in Q2 FY24 and ₹609 Cr in Q3 FY23.
EPS Improvement: Earnings per Share (EPS) at ₹2.59 in Q3 FY24, up from ₹2.40 in Q2 FY24 and ₹1.91 in Q3 FY23.
Consistent Growth: Strong performance with a steady rise in revenue, profit, and EPS compared to both QoQ and YoY.
The company's revenue has shown steady growth, with a 7.1% increase from Q2 FY24 and an 8.5% year-over-year increase from Q3 FY23. The net profit has grown significantly by 34.6% year-over-year, highlighting strong operational efficiency and financial health. EPS growth further reflects the company’s ability to generate higher returns for shareholders.
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Conclusion:
With both technical and fundamental factors favouring the stock, Ashok Leyland presents a compelling long-term investment opportunity. A successful bull flag breakout could drive the stock towards higher levels in the coming months. The company’s improving financials, increasing revenue, and debt-free status further strengthen its investment appeal.
Traders and investors should monitor the breakout levels closely and align their strategies accordingly.
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Disclaimer:
This analysis is for educational purposes only. Investors should conduct their own research before making any trading decisions.
