Ashok Leyland share price: Morgan Stanley flagged a cautious near-term outlook, issuing a ‘tactical sell’ call on the stock. The brokerage has maintained its ‘Equal-weight’ rating with a target price of Rs 180, but expects the stock to underperform the broader market over the next 30 days.
Morgan Stanley’s caution comes after a sharp rally in the stock, which has gained nearly 20 per cent over the past six months, outperforming a broader market that has declined around 8 per cent during the same period. The recent re-rating, according to the brokerage, has been driven largely by expectations of a recovery in commercial vehicle (CV) volumes and improved pricing discipline across segments.
However, the brokerage believes much of the near-term optimism is already priced in. It assigned a 70–80 per cent probability to a downside scenario, citing a combination of moderating growth trends and rising input cost pressures that could weigh on earnings.
Recent operating data reflects a mixed picture. Ashok Leyland reported March CV sales of 25,381 units, up 5 per cent year-on-year and 15 per cent sequentially, indicating steady demand. In its Q3FY26 results, the company posted solid growth, with revenue rising 21.7 per cent year-on-year to 11,534 crore and EBITDA increasing 26.7 per cent to Rs 1,535 crore. Margins expanded by 50 basis points to 13.3 per cent, supported by cost controls and operating leverage.
Despite this, profit growth remained modest, rising 4.5 per cent to Rs 796 crore, partly impacted by a one-off hit from the implementation of a new labour code. The company also saw some pressure on gross margins due to higher costs, even as lower employee expenses helped offset the impact at the operating level.
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