Brokerages have mixed views on Ashok Leyland, focusing on expected volume recovery, improving margins, and challenges in the commercial vehicle (CV) segment. Here’s a summary of recommendations and key insights:
| Brokerage | Rating | Target Price | Key Highlights |
|---|---|---|---|
| Morgan Stanley | Overweight | ₹268 | Expects gradual volume improvement driven by a favorable base; sees valuation support and volume recovery. |
| JPMorgan | Overweight | ₹250 | Q2 results exceeded expectations on strong gross margin; expects positive YoY volume growth in H2FY25 but lowered FY25-27 EBITDA estimates by 4-14%. |
| Nomura | Buy | ₹247 | Margins supported by pricing discipline; expects growth from Q4FY25 despite recent CV demand weakness. |
| CLSA | Underperform | ₹188 | Projects 0-2% industry growth for medium & heavy commercial vehicles (M&HCV) in FY25; cautious about possible downcycle into FY26. |
| Citi | Buy | ₹260 | Highlights positive outlook with better-than-expected gross margins; new product launches should boost market share, especially in buses and light commercial vehicles (LCVs). |
| Jefferies | Hold | ₹235 | Sees capex-led economic cycle supporting demand; appreciates focus on profitability but reduced FY25-27 EPS estimates by 7-8%. |
| Kotak Institutional Equities | Add | ₹235 | EBITDA above estimates due to strong gross margin; expects gradual recovery in truck and LCV segments from FY26 with 6% volume CAGR forecasted over FY25-27. |
Key Brokerage Insights
- Morgan Stanley: Holds an ‘Overweight’ rating on Ashok Leyland with a target of ₹268, anticipating volume recovery due to favorable base effects and valuation support.
- JPMorgan: Also rates Ashok Leyland ‘Overweight’ with a target of ₹250, noting a strong Q2 performance on gross margin but adjusting EBITDA estimates down for FY25-27, expecting volumes to pick up by Q1FY26.
- Nomura: Reiterates a ‘Buy’ call, maintaining a positive cycle outlook and projecting growth from Q4FY25. Margins remain steady due to disciplined pricing.
- CLSA: Takes a cautious stance with an ‘Underperform’ rating and a target of ₹188, citing minimal growth in M&HCV for FY25 and concerns about a possible downcycle extending into FY26.
- Citi: Issues a ‘Buy’ call, noting positive gross margin performance and an optimistic outlook. Highlights new product introductions that should strengthen market share in buses and LCVs.
- Jefferies: Recommends a ‘Hold’ rating, with expectations for demand driven by a capex-led economic cycle. Focuses on profitability but cut EPS forecasts by 7-8% for FY25-27.
- Kotak Institutional Equities: Upgraded Ashok Leyland to ‘Add’ with a target of ₹235, expecting gradual recovery in trucks and LCVs and forecasting a 6% volume CAGR over FY25-27.
Brokerages generally expect Ashok Leyland to see gradual volume recovery, especially in trucks and LCVs, driven by economic support and new product launches. However, concerns around industry growth and cyclical risks lead to a mixed view, with ratings ranging from ‘Underperform’ to ‘Buy.’
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
