Ashok Leyland Shares Rally After Q2 Results: Analysts Split on Next Growth Phase

Ashok Leyland’s shares surged up to 5.5% to ₹150.49 on Thursday after the company announced its July–September quarter results, before settling near ₹147.88 by 10 am. The stock has now gained 42% over the past year, fuelled by improving margins, expanding export volumes and a steady shift toward premium offerings and non-cyclical revenue streams.

The company posted a 9.3% year-on-year increase in revenue to ₹9,588 crore, driven by healthy volumes across its commercial vehicle portfolio. Profit, however, remained flat at ₹771 crore due to a one-time loss of ₹40 crore—unlike last year when a one-time gain boosted net income.

The standout metric was operational performance. Ashok Leyland reported an EBITDA of ₹1,162 crore, up 14.2% year-on-year, marking its 11th consecutive quarter of double-digit growth. Margins strengthened to 12%, reinforcing the company’s positioning in a recovering commercial vehicle market.

Why the Stock Is Rising

Analysts highlight that despite mixed headline numbers, momentum remains intact. The company continues to show resilience across segments, supported by:

• Strong MHCV and LCV demand

• Margin expansion through premium trucks

• Robust cost control

• A 45% YoY rise in export volumes to the Gulf, Africa and SAARC markets

• Better product mix and growing non-truck segments

Brokerages mostly hold a positive view. Choice Institutional Equities noted Ashok Leyland’s sustained MHCV leadership with a 31% market share, along with gains in LCVs through products like the ‘Saathi’. The brokerage expects new 320HP and 360HP heavy-duty trucks to lift profitability and has set a target of ₹161 (Buy).

JM Financial echoed this optimism, citing margin strength and anticipating a stronger H2 FY26 driven by government capex, improving freight activity, and recovery in construction and mining. It raised its target to ₹165 (Buy).

LKP Securities remains bullish as well, projecting stronger FY26 demand and highlighting rapid momentum in the electric bus segment. Its ₹263 target (Buy) is among the highest in the market.

But Not All Analysts Are Convinced

Elara Capital remains cautious, warning of the inherent volatility in the MHCV cycle. The brokerage expects only 4% MHCV growth in FY26, followed by a slight decline, resulting in a modest CAGR of just 1% through FY25–28. It reiterated a Reduce rating with a ₹120 target.

Elara acknowledged, however, that non-truck businesses—spares, defence and power solutions—are helping reduce cyclicality and now contribute 20% of total revenue.

Investor Outlook: Buy, Hold, or Sell?

Most brokerages believe Ashok Leyland’s fundamentals remain strong, supported by rising exports, margin expansion, new product launches, and diversification into electric mobility through Switch Mobility. The demand outlook for buses and LCVs is encouraging, and infrastructure spending is expected to support heavier truck sales.

However, investors must weigh these positives against the historically cyclical nature of the MHCV industry, where downcycles tend to be sharper and longer.

With price targets ranging widely—from ₹120 on the cautious end to ₹263 on the bullish side—the stock sits in a valuation grey zone.

For investors confident in continued margin expansion and a supportive demand cycle, multiple brokerages see room for upside. For those wary of downcycle risks, staying selective may be prudent at current levels. Ultimately, the stock’s next big move will depend on how the commercial vehicle cycle shapes up through FY26 and beyond.