Ashok Leyland shares fall post Q4 earnings; should you buy, sell or hold?

Nomura has a Buy call on Ashok Leyland with a target price of Rs 275 per share, reflecting an upside potential of 14.5 percent from the last close of Rs 240 on the NSE. The brokerage noted that Q4 EBITDA was in line with expectations and believes a pick-up in replacement demand could support growth in FY26. It expects 5 percent growth in the medium and heavy commercial vehicle (M&HCV) segment in FY26 and FY27, aided by improved government capital expenditure. Nomura also sees tailwinds from lower interest rates and fuel prices. It forecasts a 15 percent earnings CAGR for FY25–27, and finds current valuations attractive.

Morgan Stanley has maintained an Overweight rating with a target price of Rs 284. While revenue came in below estimates, EBITDA exceeded expectations, with margins at 15 percent versus the estimated 14.3 percent. Adjusted profit after tax (PAT), accounting for a write-off of intangible assets and impairment losses, stood at Rs 1,260 crore.

On the other hand, HSBC has downgraded Ashok Leyland to Hold, though it raised the target price to Rs 260, an upside of 8 percent from the previous close. The brokerage attributed the strong Q4 operating margins to operating leverage and cost-cutting efforts. However, it flagged concerns that demand and cost-related headwinds could put pressure on margins going forward.

The company said it achieved the highest-ever quarterly and annual revenues, EBITDA, and PAT. The overall commercial vehicle volumes were 1,95,093 units in FY25.

Shares of the company were trading at Rs 239, lower by 0.4 percent from the last close on the NSE. Ashok Leyland has gained 9 percent since the start of the year.

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