Kotak downgrades Ashok Leyland to sell on MHCV sale decline risk

The brokerage firm says that domestic M&HCV industry volumes have declined on annual basis in June 2016 which the market considers an one-off due to strong growth in April-May 2016.

July 05, 2016 / 14:43 IST

26 Aug, 2025 12:21

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Moneycontrol Bureau Following weak sales of medium & heavy commercial vehicles (M&HCV) in June, Kotak has downgraded Ashok Leyland to sell stating that there are major signs of demand moderation in CV segment. It has also reduced target price on Ashok Leyland to Rs 85 from Rs 110 earlier. Shares of Ashok Leyland slipped 5 percent intraday on Tuesday.

The brokerage firm says that domestic M&HCV industry volumes have declined on annual basis in June 2016 which the market considers an one-off due to strong growth in April-May 2016.

Kotak warns that freight demand in the economy is weak while replacement demand is also moderating. Slowdown in the below 25 ton segment is even more steep while truck freight rates are not increasing, it adds.

Sales for Ashok Leyland’s M&HCV rose 8 percent to 8,685 units last month as against 8,016 units in the year-ago period. Ashok Leyland reported a 7 percent increase in total sales at 11,108 units in June 2016.

Tata Motors’ M&HCV sales fell 11 percent to 10,147 units in June 2016 over June 2015. Sales of Tata Motors light commercial vehicles (LCVs) rose 14 percent to 16,017 units in June 2016 over June 2015.