Broker’s Call: Ashok Leyland (Add)

Target: ₹225

CMP: ₹210.85

In Q3FY26, Ashok Leyland (AL) delivered its highest-ever volumes and revenue. Revenue rose 21.7 per cent year on year, supported by GST-led price rationalisation and a revival in freight demand. EBITDA grew 26.7 per cent and margin improved 53 basis points to 13.3 per cent, reflecting operating leverage and disciplined cost control. Volume momentum was broad-based, with domestic M&HCV and LCV industries growing 24 per cent and 23 per cent, respectively, while AL continued to outperform in LCVs with 30 per cent growth. 

AL continued to gain market share across key segments, with domestic M&HCV share at 30.9 per cent YTD-FY26 and LCV share at 12.7 per cent, supported by strong execution and an expanding network. Recent launches of 360 HP Hippo tractors and Taurus tippers align well with customer preference for higher productivity and lower total cost of ownership, while new LCV offering enhances competitiveness in last-mile logistics.  We expect AL to deliver sustained earnings growth and market share gains through FY27E and beyond.

We value AL’s core business at 22x on FY28E EPS, arriving at a value of ₹200. We assign a value of ₹18 to Hinduja Leyland Finance and ₹7 to Switch Mobility, resulting in a target price of ₹225. We downgrade the rating to ‘Add’ from ‘Buy’ due to recent stock price appreciation and near-term margin pressure from commodity headwinds, while remaining positive on long-term fundamentals and growth prospects.

Published on February 12, 2026