Currently, the CV industry (Ashok Leyland and TMLCV) trades at a 1-year forward EV/EBITDA of around 12x, while the PV industry trades at 15-17x. HSBC said that historically this valuation gap was justified due to the higher cyclicality and volatile margins in the CV sector. However, with both industries’ profiles now converging, the brokerage believes CV valuations have room to re-rate.
