Ashok Leyland’s appeal stems from its move beyond trucks, restrained capital expenditure (capex), stronger exports, and a cleaner product mix. At current levels, Tata Motors trades at just over 10x its 2026–27 (FY27) enterprise value-to-operating profit, while its smaller rival commands about a 15 per cent premium on that metric.
Revenue growth in Q2FY26 was broadly similar. Ashok Leyland delivered a 9.3 per cent year-on-year (Y-o-Y) rise, while Tata Motors grew 8.7 per cent. Tata Motors’ volumes were up 12 per cent; Ashok Leyland’s rose 7.7 per cent.
Tata Motors’ top line was held back by a 4 per cent fall in realisations due to a weaker mix, whereas Ashok Leyland managed a 1.6 per cent increase in average selling prices.
VE Commercial Vehicles (VECV) — the Volvo Group–Eicher Motors joint venture — reported 10.3 per cent revenue growth, driven by a 5.8 per cent rise in volumes and a 4.2 per cent improvement in realisations.
Looking ahead, the larger players expect firmer demand in light commercial vehicles (LCVs) after the goods and services tax cut. They see the second half of FY26 faring better than the first, led by higher volumes, LCVs outperforming heavy commercial vehicles, and continued government capital spending. Better fleet utilisation, a pickup in construction and mining activity, and Reserve Bank of India rate cuts are also expected to aid the sector. Stronger consumption has pushed up utilisation and freight rates, which works in the industry’s favour.
All three companies reported improved operating profitability. Tata Motors topped the pack, with a 170 basis-point (bps) Y-o-Y rise to 12.4 per cent, helped by operating leverage, firmer pricing, lower discounts, and a more favourable mix.
Ashok Leyland’s margin rose 50 bps Y-o-Y to 12.1 per cent, in line with expectations. The improvement came from a better mix, supported by higher non-CV contributions.
VECV’s margin increased 71 bps Y-o-Y but fell 117 bps sequentially to 7.8 per cent — marking a fourth straight quarter below the 8 per cent mark.
Among pure-play CV companies, Ashok Leyland remains the preferred pick. The stock hit a lifetime high on Friday after a stronger-than-expected operating performance and a brighter outlook. Brokerages largely remain positive, citing its growing share of non-truck businesses, cautious capex, rising exports, and a healthier mix. These shifts are expected to support revenue growth, margins, and return ratios.
Non-truck businesses now account for about half of the company’s revenue, compared to 40 per cent in 2021–22 (FY22). Within this, buses make up 13 per cent, LCVs 12 per cent, spares 10 per cent, and exports 7–8 per cent.
These segments carry higher margins than medium and heavy commercial vehicles (MHCVs), helping pull down breakeven levels to 1,000–1,200 units a month from 6,000–7,000 earlier. Revenue from the defence unit grew 25 per cent Y-o-Y in Q2FY26, and a strong order book suggests steady support from this vertical through FY26.
JM Financial, led by analyst Saksham Kaushal, expects Ashok Leyland’s margins to benefit from a rising share of high-margin non-MHCV segments, tight cost control, and exports. The brokerage has raised its operating profit margin estimates by 40 bps and 50 bps for FY26 and FY27, and has a ‘buy’ rating with a target price of ₹165.
Motilal Oswal has a ‘neutral’ stance on Tata Motors due to the absence of clear triggers and has set a target price of ₹341. Analyst Aniket Mhatre points to the company’s shrinking market share across major segments. The slide in LCV goods — from 40 per cent in FY22 to 27 per cent now — is particularly concerning, with the gap widening against current leader Mahindra & Mahindra.
Leyland finds its balance on a wider wheelbase
 "Ashok Leyland")