Buy Ashok Leyland Ltd For Target Rs.160 by Axis Securities
Recommendation Rationale
* Market Share Gains – Outperforming Industry Trends: Ashok Leyland’s MHCV volumes are estimated to have grown by 3–5% YoY in FY26, reflecting sustained demand momentum. We expect the company to maintain its market share at ~31.1% (vs 29.8% in the previous year) over the next two years. In the LCV segment, market share improved to ~15% YoY, highlighting the brand’s strong competitive positioning and product excellence across the commercial vehicle (CV) spectrum.
* HFL- Strong Growth and Value Unlock Potential: Ashok Leyland’s captive NBFC, Hinduja Leyland Finance (HFL), reported 26% YoY growth in AUM during Q2FY26, reaching Rs 52,635 Cr, with HHF AUM at Rs 14,903 Cr. PAT stood at Rs 196 Cr and NNPA at 1.59%. The upcoming merger with NXTDigital will pave the way for a public listing, unlocking value and further strengthening the balance sheet, with Ashok Leyland holding a 61.1% stake.
* Capacity Expansion & Dealer Network – Enabling Scale: The Andhra Pradesh plant is expected to ramp up to 200 units/month by year-end, while the upcoming Lucknow bus plant (Q3FY26) will enhance bus body-building capacity from 12,000 to over 20,000 units per year. The company continues to strengthen its retail presence, adding 27 MHCV and 26 LCV touchpoints in Q2, taking the total network to 1,100 MHCV and 876 LCV outlets, with a target of over 2,000 combined touchpoints by the end of FY26.
For More Axis Securities Disclaimer https://simplehai.axisdirect.in/disclaimer-home
SEBI Registration number is INZ000161633
