Ashok Leyland Share Price Today: Ashok Leyland shares gained on Monday after the commercial vehicle maker reported a record June quarter, with four brokerages raising their target prices despite concerns over rising commodity costs. While demand remains strong, analysts see margins as the key variable for the stock's next leg of growth.
ALSO READ: Ashok Leyland Q1: Analysts See More Upside Despite Margin Pressure; Check New Target Prices
Ashok Leyland shares rose as much as 2.61% to Rs 176.40 on the BSE. At 9:18 am, the stock was trading 2.04% higher at Rs 175.40, while the BSE Sensex was down 0.4% at around 77,696.
Four Brokerages Raise Ashok Leyland Target Prices
Goldman Sachs, Kotak Institutional Equities, CLSA and UBS raised their target prices following the Q1 results. Goldman increased its target to Rs 175 from Rs 162, Kotak Securities raised it to Rs 180 from Rs 170, while CLSA lifted its target to Rs 196 from Rs 183. UBS increased its target to Rs 210 from Rs 208.
Citi, however, retained its Buy rating while trimming its target to Rs 200 from Rs 205. Jefferies maintained its Hold rating and Rs 160 target, citing valuation concerns.
With the latest changes, brokerages remain broadly constructive on Ashok Leyland's demand outlook, but differ on how quickly margins can recover as commodity costs rise.
Record Q1 Revenue, Volumes; Margin Takes A Hit
Ashok Leyland reported its highest-ever first-quarter commercial vehicle volumes at 48,763 units, compared with 44,238 units a year ago. Revenue also reached a record Rs 9,634 crore, up 10.4% year-on-year (YoY), while net profit rose 2.5% to Rs 609 crore.
The pressure point was profitability. EBITDA remained flat at Rs 970 crore, while the EBITDA margin narrowed to 10.1% from 11.1% in the year-ago quarter, as higher material costs weighed on margins.
ALSO READ: Ashok Leyland Q1 Results: Profit Rises 2.5% As Revenue Grows 10%
The company nevertheless strengthened its balance sheet, with net cash rising to Rs 2,252 crore, a positive swing of Rs 1,432 crore from a year ago.
CV Demand Remains Strong
Ashok Leyland's MHCV truck volumes, excluding defence, increased 15% YoY, while domestic LCV volumes rose 21%. LCV volumes stood at a record 18,874 units in Q1.
The company said demand across key segments remains robust, with management expecting commercial vehicle industry growth to remain healthy. It has also taken price hikes of 225 basis points in MHCVs and more than 350 basis points in LCVs so far in FY27.
Ashok Leyland also launched an air suspension technology in its multi-axle trucks during the quarter and added 33 touchpoints to its network.
Commodity Costs Emerge As Key Margin Risk
Goldman Sachs expects high-single-digit truck volume growth in FY27 but warned that higher-cost inventory could put further pressure on margins in Q2. The brokerage noted that gross margin fell 90 basis points YoY.
Kotak expects margins to soften in Q2 because of the commodity cost lead-lag, although it sees price hikes, a favourable non-auto mix and cost controls supporting a recovery in the second half.
CLSA expects margins to gradually normalise from Q3 as key commodity prices stabilise. UBS also flagged elevated commodity costs as a key test for Q2, although it said pricing discipline remains intact.
Citi expects strong CV demand, particularly high-single-digit MHCV growth, while new high-payload models could support market-share gains. However, it also flagged rising commodity costs as a concern for margins.
Valuation Keeps Jefferies Cautious
Jefferies remains more conservative, retaining its Hold rating and Rs 160 target. The brokerage expects truck demand to remain strong but sees growth moderating to mid-single digits in the second half of FY27 on a high base.
It also highlighted valuations as a concern, with Ashok Leyland trading at around 15x forward EV/EBITDA versus its 13x 10-year average.
For investors, the central question now is whether sustained CV demand and pricing actions can offset higher input costs. With four brokerages raising their targets after the record Q1, the next test for Ashok Leyland will be whether margins can recover as commodity-cost pressures ease.
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