Is Ashok Leyland Share Worth Investing?

Actual Question:

I m going to buy Ashok Leyland share and going to hold it for 5 year or more is it good investment?

Answer:

Please do not buy Ashok Leyland shares presently. The company does not qualify for inclusion in a safe value investing portfolio especially under the present market conditions, which makes the scrip expensive.

I have prepared and posted a brief investment research report on the scrip on my blog. You may:

1. View the report at: Ashok Leyland Investment Research Report
2. Download for free at: Company Reports-Ashok Leyland.pdf

Here I reproduce the final conclusions:

1. Ashok Leyland is without doubt a wonderful company and brand.
2. The truck business in the auto sector is very challenging.
3. Sales are linked with the country’s economic growth
4. Competition from new aggressive multinational entrants in the past two decades
5. The company’s performance is average in the challenging environment.
6. The market conditions, especially the steep increase in share price in the last three years, has taken the price to earnings (PE) and price to book (P2BV) ratio out of a value investor’s acceptable levels.
7. The share is not recommended for inclusion under the present market conditions.
8. Even when market conditions vastly improve and bring down the PE and P2BV ratios, the company’s performance with present profitability and balance sheet ratios will only suggest inclusion as a means of diversification rather than as an attraction.

Instead of Ashok Leyland, you may consider investing in the following which are both good companies and available at attractive valuations:

Name of the Stock	Read Research Report	Download Research Report
Rural Electrification Corporation	REC Research Report	REC Research Report
Power Finance Corporation	PFC Research Report	Power Finance Corporation
Great Eastern Shipping Co. Ltd.	Great Eastern Shipping Research Report	Great Eastern Shipping Company

The above three scrips I have been investing for a long time and invested in this December, 2016 also.

Simple Formula to Determine Intrinsic Value of a Stock

Actual Question:

Is there any simple strategy or formula to identify intrinsic value of a stock?

Answer:

Yes there is.

1. Multiply the earnings per share (EPS) by 15 and you will get one intrinsic value based on earnings.
2. Multiply the book value per share by 1.5 and you will get another intrinsic value based on value of assets.
3. The minimum of the two intrinsic values can safely be taken as the intrinsic value of the share of the company.

Since you asked a simple question I have given a simple answer, but do not make investment decision based on just the intrinsic value. There are many factor to be considered.

Suggested Further Reading:

• Earnings Per Share (EPS)
• Price to Earnings (PE) Ratio
• Price to Book Value
• How to Find The Fair Price of A Stock?