Ashok Leyland shares hit a record high, brokerages point to second-half recovery

Heavy Commercial Vehicles manufacturer Ashok Leyland’s shares rallied 6% on Monday to hit a record high of ₹222.85. This was after the company’s fourth quarter performance was a beat, driven by improved mix and cost-control measures. This resulted in an EBITDA margin expansion of 14.1%.

The street is bullish. Here’s a look at Ashok Leyland’s share price targets:

Domestic brokerage firm Motilal Oswal expects a recovery in commercial vehicle demand from the second half of the financial year 2025 onwards as structural demand drivers remain intact.

“AL is the best investment choice in the CV growth cycle, as it has positioned itself to expand revenue/profit pools. Moreover, its focus on profitable growth driven by lower discounts, a better mix, and cost control measures should bode well for EBITDA margin expansion over FY24-26E,” it said in a note while reiterating a ‘Buy’ rating, with a target price of ₹245 per share.

The brokerage has raised its FY25 and FY26 earnings estimate by 7% and 6%, respectively, to factor in a better gross margin and a lower interest burden.

Emkay Global has upgraded the Ashok Leyland stock to ‘Buy’ from ‘Sell’ earlier, with a new target price of ₹250 per share on an upcycle potential from the financial year 2026.

Despite a 21% increase in stock price in three months, Ashok Leyland remains among the least-expensive original equipment manufacturers (OEMs), Emkay noted.

The brokerage firm contended that after two likely flattish years (FY23-25E), the commercial vehicle cycle may turn positive from FY26.

“Amid intact fleet operator profitability, we believe the pricing power and margin expansion for CV OEMs will sustain; this drives FY26 earnings per share (EPS) estimates up 19%,” it said.

Prabhudas lilladher has retained its ‘Buy’ rating on the stock, and increased its target price to ₹239 from

₹210 per share earlier, citing delivery of healthy margin expansion.

According to the brokerage, the management said that it will continue to work towards improving its EBITDA margin towards mid-teens, which will be led by pricing action, cost cutting initiatives and discipline on discounts.

Prabhudas lilladher believes Ashok Leyland is well-placed to deliver on market share gains and volume growth, which it said will be driven by new launches and demand for higher tonnage CVs.

Additionally, it is looking to fill white spaces in Light Commercial Vehicles (LCV) segment with further 6+ new launches planned for FY25 including electric vehicles.

Factoring this, the brokerage has increased its EBITDA estimates by 10.6% and 18.1% for FY25 and FY26, respectively.

On the flip side, Kotak Institutional Equities has maintained a ‘Reduce’ rating with a revised target of ₹200 per share. It expects the CV industry volumes to recover post elections, especially driven by the buses segment.

The brokerage also expects profitability of the company to be maintained at current levels in FY25, driven by an increase in non-auto mix and cost-control measures.

Kotak has increased its FY24-26 earnings estimates by 10-11% on higher EBITDA margin assumptions led by higher non-auto mix.

While global brokerage firm Jefferies has a ‘Hold’ recommendation on Ashok Leyland, it raised its target price to ₹205 per share. The brokerage likes the company’s improving margin trajectory.

Jefferies believes the stock will be rangebound until demand visibility improves. The brokerage expects a capex-led economic cycle to fuel demand growth ahead.

It said the stock is already at 5.2 times financial year 2025 PB (price-book) on consensus as against its last cycle peak of 5.8 times.