Ashok Leyland at crossroads after Q2: Buy for growth or reduce for caution?

While Choice has reiterated its Buy rating, citing resilient operational performance & steady market leadership, Nuvama has maintained 'Reduce' on valuation concerns and moderation in industry growth

Brokerages remain divided on Ashok Leyland after the Hinduja Group-led commercial vehicle (CV) major reported its September quarter (Q2FY26) results on Wednesday, November 12. While Choice Institutional Equities has reiterated its Buy rating, citing resilient operational performance and steady market leadership, Nuvama Institutional Equities has maintained a Reduce rating on valuation concerns and moderation in industry growth.

Ashok Leyland Q2FY26 results 

The company reported a consolidated net profit of ₹755.77 crore for Q2FY26, up 7.1 per cent year-on-year (Y-o-Y) from ₹705.64 crore in the corresponding quarter last year, aided by steady demand across segments. Revenue from operations rose 9.4 per cent Y-o-Y to ₹10,543.97 crore, up 7.6 per cent sequentially. Ebitda came in at ₹1,162 crore, with a margin of 12.1 per cent, compared with ₹1,017 crore in Q2FY25.

 

 

Medium and heavy commercial vehicle (MHCV) volumes rose 3 per cent Y-o-Y to 26,307 units, while light commercial vehicle (LCV) volumes were up 6 per cent at 17,697 units. The bus segment, the company said, extended its growth streak for the 18th consecutive quarter.

Choice Institutional Equities: Buy | Target ₹161

Analysts Subhash Gate and Heet Chheda of Choice Institutional Equities have maintained a Buy rating on Ashok Leyland with a target price of ₹161, citing another quarter of “resilient performance” and continued leadership in the domestic MHCV and bus segments.

 

“The company has delivered another quarter of resilient performance, consolidating its leadership in the domestic MHCV and bus segments while strengthening its foothold in LCVs and exports,” the analysts wrote.

 

The brokerage has revised its FY26/27E earnings per share (EPS) estimates upward by 2.2 per cent and 2.9 per cent, respectively. It values the company’s core business at 20x (unchanged) on the average FY27/28E EPS, arriving at ₹142 per share. “We assign a value of ₹15 to HLFL and ₹4 to Switch Mobility, leading to a revised target price of ₹161,” they said.

 

Choice expects the company’s focus on premium product launches to enhance its competitive positioning. Upcoming 320HP and 360HP heavy-duty trucks — featuring advanced six-cylinder engines with 20–30 per cent higher torque — are expected to drive margin-accretive growth in the mining and construction segments.

 

“In the LCV portfolio, the success of the ‘Saathi’ model and the planned launch of a bi-fuel (CNG/petrol or CNG/diesel) variant in the next two quarters would strengthen AL’s addressable market in urban logistics. Additionally, its bus capacity expansion, from 12,000 to over 20,000 units after ramp-up at its AP and Lucknow plants, will support rising domestic and export demand,” the analysts noted.

 

Choice expects Ashok Leyland’s diversified portfolio, premiumisation focus, and improving export mix to drive sustained revenue and margin growth. “With a revival in fleet replacement demand, infrastructure momentum, and an expanding alternative-fuel lineup, the company is well-positioned to deliver profitable, long-term growth in FY26E and beyond,” they added.  CATCH STOCK MARKET LIVE UPDATES TODAY

Nuvama Institutional Equities: Reduce | Target ₹123

In contrast, Raghunandhan NL, Manav Shah, and Rahul Kumar of Nuvama Institutional Equities have retained their Reduce rating with an unchanged target price of ₹123, valuing the company at 10x EV/Ebitda on September 2027 estimates, and investment value per share at ₹18.

 

“The stock trades at 14x EV/Ebitda for both FY27E/28E. We are building in a muted revenue/Ebitda CAGR of 5 per cent each over FY25–28E,” the analysts wrote.

 

After a strong 23 per cent CAGR in the domestic MHCV industry over FY21–25, Nuvama expects moderation owing to “reasonable utilisation levels with transporters, increasing competition from Railways, and a high base.” The brokerage forecasts MHCV growth to remain subdued at around 2 per cent CAGR between FY25 and FY28, though it expects Ashok Leyland to sustain its market share.

 

Nuvama noted that Ashok Leyland is strengthening its EV position across both passenger and cargo segments. It has an order book of 1,650 units and is expected to participate aggressively in upcoming e-bus tenders following recent government assurances on payment security.