Motilal Oswal Maintains Buy Call for Ashok Leyland with Target Price of Rs 185

Ashok Leyland Remains Resilient Amidst Ongoing Geopolitical Tensions

Ashok Leyland, a prominent player in the commercial vehicle (CV) market, has managed to sustain its domestic demand even in March 2026, following the revival post the Goods and Services Tax (GST) rate cut. The company has observed a positive demand revival across all CV segments, indicating a strong market performance.

To further strengthen its presence in the Western India market, Ashok Leyland plans to expand its network by adding 30 new touchpoints to its existing 150 in the region. This strategic move aims to gain market share and increase its customer base. However, the ongoing geopolitical tensions pose significant risks to the company's estimates.

The impact of the West Asia conflict on Ashok Leyland's operations is multifaceted. A sustained rise in crude oil prices could derail economic growth and negatively affect CV demand, while exports are likely to face near-term headwinds due to the significant contribution of the Middle East market (35-40% of total exports). Furthermore, uncertainty over sustained gas availability and rising input costs also pose challenges for the company.

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In light of these risks, Motilal Oswal has adjusted its estimates downwards by 13% each for the fiscal years 2027 and 2028.

Assuming the conflict does not extend beyond the first quarter of fiscal year 2027, Motilal Oswal reiterates its BUY rating on Ashok Leyland with a target price of INR185. This valuation is based on an estimated earnings multiple of 13 times the company's December 2027 earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) plus an additional INR10 per share for the non-banking financial company (NBFC) component.