Ashok Leyland Shares In Focus As Brokerages Flag Demand Uncertainty Despite Q4 Profit Jump — Buy Or Hold?

Shares of Ashok Leyland will in focus today, May 29 after brokerages gave a mixed review of its fourth quarter for fiscal year 2025-26. The automaker declared earnings on Thursday, May 28 when the stock market was closed for Bakrid.
Ashok Leyland's net profit rose 14.2% to Rs 1,291 crore in the fourth quarter of the previous fiscal from Rs 1,130 crore in the 
corresponding period. 
Revenue jumped 17.4% year-on-year for the three months ended March at Rs 17,246 crore in comparison to Rs 14,695 crore. Operating income, or earnings before interest and taxes rose 10.6% to Rs 3,308 crore from Rs 2,991 crore. Margins contracted to 19.2% from 20.4% in the same quarter of fiscal 2025. Along with earnings, the company declared a dividend of Rs 2.5 per equity share for the fiscal 2026.

Reviewing Ashok Leyland's Q4 show, brokerages primarily flagged commodity headwinds and volatile demand trends. Morgan Stanley maintained 'equal-weight' coverage at a target price of Rs 180, marking a 10% upside from its closing price of Rs 163.62. Jefferies retained 'hold' rating on the stock, cutting target price to Rs 160, a 2.2% downside, while highlighitng uncertainty in truck demand amid rising fuel prices, inflation and weak monsoon.

Reflecting on above estimates Q4 results, Citi reiterated buy rating at a target price of Rs 205, a 25% upside. Meanwhile, JP Morgan maintained 'neutral' coverage on Ashol Leyland and hiked target price to Rs 175, marking a 6.9% upside. The brokerage mentioned that the underlying demand drivers remain resilient amid fluid macro conditions. 

ALSO READ: Ashok Leyland Q4: Net Profit Rises 14%; Dividend Declared — Check Record Date

Morgan Stanley on Ashok Leyland

• Maintain equal-weight with target price of Rs 180 on inflationary headwinds
• Q4 was in-line
• Demand is holding up well but headwinds need to be monitored
• To manage commodity headwinds, the company has hiked prices 1-1.5%
• Commodity headwind is a challenge but Ashok Leyland did not quantify it
• Switch mobility has turned profitable
• Company is starting battery pack manufacturing also

 
Jefferies on Ashok Leyland

• Maintain hold and cut target price to Rs 160 from Rs 190
• In-line Q4, but truck demand uncertainty
• Cut FY27-28 EPS by 5-8% on lower margins
• Truck demand outlook is clouded by rising fuel prices, potential impact of higher inflation and weak monsoon on economy
• Higher metal prices could pose some margin headwinds too

 
Citi on Ashok Leyland

• Maintain buy with target price of Rs 205
• Q4 results slightly above estimates
• Outlook is positive though
• Near-term demand could see some moderation

JPMorgan on Ashok Leyland

• Maintain neutral and hike target price to Rs 175
• Pricing discipline likely to continue amid volatile demand trends
• Underlying demand drivers remain resilient amid fluid macro conditions. 

ALSO READ: Ashok Leyland Says Replacement Demand Remains Strong Despite Rising Costs

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