Goldman Sachs has downgraded Ashok Leyland to a neutral rating with a target price of ₹140, citing limited upside potential following the stock’s recent rally. The brokerage noted that the benefits of a mix shift towards higher-tonnage vehicles and margin improvement are already priced in at current levels.
While the commercial vehicle industry continues to benefit from replacement demand driven by an ageing fleet, Goldman Sachs expects passenger car volume growth to outpace commercial vehicles over the next 12 months. Consumption-driven sectors are providing some demand boost, and the company has seen better-than-expected traction in its light commercial vehicle segment, including the newly launched Saathi light trucks.
However, the brokerage believes the margin expansion story is largely factored into the valuation, capping further near-term upside. It said a balanced risk-reward now warrants a neutral stance on the stock.
Disclaimer: The views and recommendations made in this article are those of Goldman Sachs. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
