Buy Ashok Leyland Ltd For Target Rs. 270 By Axis Securities Ltd
* Domestic CV Industry: Ashok Leyland expects a positive FY26 for the CV industry, aided by favourable macroeconomic indicators such as robust monsoon forecasts, core sector expansion, and renewed government capex. While Q1FY26 may remain subdued due to high base effects, growth is expected to pick up meaningfully from Q2 onwards. The company anticipates low single-digit volume growth in FY26, in line with industry peers
* EV & Alternative Fuel: The company is intensifying efforts in the electric and alternative fuel space, with substantial investment earmarked for FY26. (1) 6 new LCV models, Intelligent Vehicle Acceleration Control (IVAC) for MHCVs, fully built CNG buses, and 19T and 55T EV trucks launched. (2) EV Terminal Tractor and 15mt SE Bus showcased at Auto Expo 2025 – commercial production due in FY26. (3) EV Centre of Excellence is operational to support critical component development (battery, motor, etc.).
* Cost Leadership & Margin Levers: Ashok Leyland is focused on premiumisation, cost optimisation, and service differentiation to strengthen margins. It targets Rs 100 Cr in cost savings for FY26 and is enhancing services to reduce vehicle downtime. Despite expected steel price increases, management anticipates stable margins due to internal efficiencies.
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