Ashok Leyland Shares Drop 3% After CLSA Downgrade; Electric Truck Deliveries Underway
The decline in domestic truck sales was mainly due to an oversupply in the road freight market following strong growth from fiscal years 2022 to 2024.
CLSA pointed out a nearly 10% drop in domestic truck sales during the first half of the financial year 2025.
Hinduja Group's flagship company, Ashok Leyland, saw its shares drop 3% in early trading following a downgrade by international brokerage CLSA.
The brokerage changed its rating from "outperform" to "underperform" and reduced its price target for the company from Rs 258 to Rs 188, indicating a potential decline of 15% from the previous day's closing price.
CLSA pointed out a nearly 10% drop in domestic truck sales during the first half of the financial year 2025, signaling the start of a downturn in the commercial vehicle (CV) sector, which is expected to persist until FY2026.
As of 12:11 am, Ashok Leyland shares were trading at Rs 222.57 on the NSE, up 0.10% after the downgrade.
The decline in domestic truck sales was mainly due to an oversupply in the road freight market following strong growth from fiscal years 2022 to 2024.
CLSA anticipates a year-on-year decline of 5% in Medium & Heavy Commercial Vehicle (M&HCV) volumes for fiscal years 2025 and 2026.
Ashok Leyland faces challenges such as reduced scale and increased discount risks, which could result in a 200 basis point decrease in margins, falling from 12.4% two years ago to 10.4% by FY2026.
Consequently, CLSA has lowered its earnings per share (EPS) forecasts for Ashok Leyland for fiscal years 2025, 2026, and 2027 by 12.6%, 34.9%, and 23.5%, respectively.
On October 8, Ashok Leyland began delivering electric trucks to Billion Electric Mobility, a company that secured a contract to supply 180 electric trucks for routes between Chennai-Bengaluru and Chennai-Vijayawada, according to a top official.
