Aston Martin Lagonda Global Holdings PLC

Aston Martin Lagonda Global Holdings PLC (LSE: AML) is an FTSE 250 index-listed manufacturer of luxury cars in the UK. Primarily, the company operates within the ultra-high luxury sports car market segment. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 70.38

• Decline in Wholesale Volumes and Revenue: FY2024 wholesale volumes dropped by 9% to 6,030 units (FY2023: 6,620), largely due to model transition, supply chain issues, and China’s macroeconomic weakness. Correspondingly, revenue decreased by 3% to £1,584 mn (FY2023: £1,633 mn).

• Sharp Fall in Profitability Metrics: Gross profit declined by 9% to £584m, and gross margin fell by 220bps to 36.9%, reflecting product mix shifts and fewer Specials. Q4 margin deterioration was more severe, dropping 1,010bps to 35.1% (Q4 2023: 45.2%).

• Widening Loss Before Tax and Higher Net Financing Costs: Loss before tax deepened by 21% to £289.1 mn (FY2023: £239.8 mn), driven by elevated net financing expenses of £189.6 mn (FY2023: £128.6 mn), including the impact of foreign exchange and refinancing costs.

• Surge in Net Debt and Leverage: Net debt rose sharply by 43% to £1,162.7 mn (FY2023: £814.3 mn), with the adjusted net leverage ratio increasing to 4.3x from 2.7x, reflecting lower earnings during portfolio transition and higher gross debt following FY2024 financing.

• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/ Book Value Approach

Share Price Chart  

Conclusion

AML is expected to trade at a discount due to Decline in Wholesale Volumes and Revenue, Sharp Fall in Profitability Metrics as Gross profit declined by 9% to £584 mn, Widening Loss Before Tax and Higher Net Financing Costs, Surge in Net Debt and Leverage, etc. For conducting the valuation, the following peers have been considered: Dowlais Group PLC (LSE: DWL), Mercedes-Benz Group AG (ETR: MBG), and others have been taken etc.

Given its current trading levels, the recent strategic investments and partnerships, market expansion and cost optimization strategies, along with a homecare acquisition in France, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Current Market Price of GBX 70.38 as of 04 April 2025, 09:10 AM GMT+1. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 04 April 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’