Jefferies has maintained its hold rating on Ashok Leyland with a target price of ₹120 after the company reported first-quarter results largely in line with expectations. EBITDA grew 6% year-on-year, with margins improving by 50 basis points, while volumes were up just 1% year-on-year. The brokerage said profitability remained supported, but overall growth was muted.
Jefferies noted that India’s truck industry growth has slowed, contracting by 4% in FY25 and Q1 FY26 combined. It now expects only a 3% compound annual growth rate for the sector over FY25–28, limiting upside for Ashok Leyland unless truck demand recovers meaningfully. The brokerage acknowledged the company’s sharp focus on profitability but said significant gains are unlikely without a pick-up in volumes.
Jefferies maintained its cautious stance, stating that while Ashok Leyland is well managed and committed to protecting margins, sectoral headwinds in the form of weak demand are likely to constrain growth over the medium term.
Disclaimer: The views and recommendations made in this article are those of Jefferies. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
