Ashok Leyland Shares Gets Its Most Bullish Price Target Yet From Nomura — Check Potential Upside And More

Nomura has turned more constructive on Ashok Leyland, citing clearer signs of a strengthening upcycle in the commercial vehicle (CV) industry. The brokerage has reiterated its 'Buy' rating on the stock and raised its target price, implying an upside of around 14% from current levels.

Nomura has raised its target for Ashok Leyland to Rs 196 from Rs 174, making it the highest target from any brokerage tracked by Bloomberg. Additionally, 37 of 43 analysts tracked by Bloomberg have a 'buy' rating on the stock.

Ashok Leyland, as a largely pure-play CV manufacturer, is expected to be among the biggest beneficiaries of an industry recovery. Nomura believes demand momentum is set to improve meaningfully in the second half of FY26 and into FY27, supporting a shift to double-digit growth after a relatively muted phase.

The brokerage notes that the company has executed well over the past few years, maintaining a steady market share of around 29–30% in the medium and heavy commercial vehicle (MHCV) segment. Despite competitive intensity, Ashok Leyland has avoided meaningful share erosion, a key positive as volumes start to pick up.

In light commercial vehicles (LCVs), where it was a relatively late entrant, the company has also made visible progress. Market share has improved to about 11% in FY25 from roughly 5% in FY24. Nomura attributes this to improving product acceptance and resilient demand, aided by GST cuts, a gradual consumption recovery and strong traction in the Saathi platform.

Exports have emerged as a key growth lever. Ashok Leyland reported over 50% growth in export volumes in the first half of FY26, driven by demand from GCC countries, Africa and SAARC markets.

Margins are also expected to trend higher. Nomura expects EBITDA margins to improve from about 13.5% in FY26 to 14.5% by FY28, supported by operating leverage, a richer product mix and higher export contribution.

Reflecting the improved outlook, Nomura has raised its MHCV volume estimates to 138,000 units in FY26, 153,000 in FY27 and 162,000 in FY28. Total CV volumes are now estimated at 214,000, 234,000 and 250,000 units over the same period. EBITDA estimates are 4–8% higher than earlier forecasts, while earnings per share (EPS) is seen 11–20% ahead of consensus.

On valuation, the brokerage has increased its FY28 EV/EBITDA multiple to 13x, from 12x earlier, citing stronger visibility on the upcycle. However, risks do include a slowdown in consumption affecting freight rates and the possibility that higher regulatory costs may not be fully passed on.