Ashok Leyland (AL IN) (Neutral) - CV demand likely to slow down

Research evidence excerpt

Ashok Leyland (AL IN) (Neutral) - CV demand likely to slow down

Global Markets Research

Ashok Leyland ASOK.NS AL IN 28 May 2026

EQUITY: AUTOS & AUTO PARTS

RatingCV demand likely to slow down Remains Neutral

Target price4Q results in-line; GDP slowdown and fuel hikes key Reduced from INR INR 169challenges; maintain Neutral 218

4QFY26 EBITDA margin in-line at 14.6% Closing27 May 2026price INR 164

• 4QFY26 results (Fig.1): Ashok Leyland’s revenue at INR141bn (+19% y-y) was in-line with

Implied upside Nomura/ consensus estimates. EBITDA margin at 14.6% was also in-line (Nomura: 14.6%, +3.0%

consensus: 14.8%). ASP at INR2.04mn was up 1.9% q-q. RM/sales was down 80bp q-q at

Market Cap (USD mn) 10,043.7

71.4% (Nomura: 72.5%), offset by other expenses at 9% (Nomura: 8.5%). PAT was at ADT (USD mn) 47.6

INR14.7bn +12% y-y. Net cash: rose to INR 59bn (INR26.2 bn in 3QFY26).

• Management commentary: MHCV demand: drivers are in place, but maintains cautious Relative performance chart

optimism for FY27F due to macroeconomic challenges. So far fuel hikes have not had much

impact on demand. Even INR10-15 /lit fuel hike can be passed on by freight operators. Even if

demand dips, it will again recover due to replacement need. ICV and LCV will likely moderate

and tippers could pick up. Exports—Demand is good but sales may decline in 1Q due to

logistics challenges. Defense—Revenue was at INR 12bn, +20% y-y, and pipeline is at INR

15bn. Aiming to receive many more orders in the next 2-3 years. ‘Switch’ EV: has orderbook of

1,600. Margins— Price hike was 1% in 4Q and 1-1.5% in 1QFY27. Commodity cost impact

was neutralised in 4QFY26 through cost reduction, but there will be pressure in 1QFY27F.

Operational cost and conversion costs will rise as well. A weak INR can also add to cost