Ashok Leyland
Ashok Leyland
Automobiles F&OKey Fundamentals
MidcapCommercial VehiclesAutomobilesTapetide Score
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Key Insights
Strengths
3- Company has delivered good profit growth of 84.1% CAGR over last 5 years
- Company has a good return on equity (ROE) track record: 3 Years ROE 28.0%
- Company has been maintaining a healthy dividend payout of 58.9%
Weaknesses
2- Stock is trading at 6.75 times its book value
- Promoters have pledged 40.1% of their holding.
Growth Rate
AI Analysis — Bull vs Bear
anthropic claude-opus-4.6 2h agoAshok Leyland, India's second-largest commercial vehicle manufacturer with a market cap of ₹94,798 Cr, trades at a PE of 26.2x and PB of 6.86x. The company has delivered an exceptional 84% compounded profit CAGR over five years with a 3-year average ROE of 28%, while maintaining a dividend payout of 58.9%, though promoter pledge at 40.1% and premium valuation multiples remain notable concerns.
- Exceptional profit growth trajectory with 84% compounded profit CAGR over 5 years, demonstrating strong operating leverage in the CV upcycle
- Consistent and high return on equity at 27% last year and 28% on a 3-year average, indicating efficient capital deployment
- Healthy dividend payout ratio of 58.9% with a current dividend yield of 2.11%, reflecting shareholder-friendly capital allocation
- TTM sales growth of 17% signals continued top-line momentum and demand strength in the commercial vehicle segment
- TTM profit growth of 17% tracking in line with revenue growth, suggesting margin stability at current levels
- Stock price CAGR of 22% over 1-year and 3-year periods shows sustained investor confidence and consistent re-rating
- Long-term ROE of 19% over 10 years demonstrates the company's ability to generate above-cost-of-capital returns through multiple cycles
- 5-year compounded sales CAGR of 20% reflects strong structural demand recovery and market share resilience in MHCV and LCV segments
- Promoters have pledged 40.1% of their holding, creating a significant overhang risk if share prices decline or lenders invoke margin calls
- Stock trades at 6.86x book value, well above historical averages for commercial vehicle manufacturers, leaving limited margin of safety
- PE ratio of 26.2x is elevated for a cyclical commercial vehicle business that is subject to sharp earnings downturns during industry troughs
- 3-year compounded sales CAGR of only 5% indicates that recent top-line growth is a recovery phenomenon rather than sustained structural acceleration
- 10-year compounded profit CAGR of 15% is significantly lower than the 5-year figure of 84%, highlighting the deep cyclicality and loss-making periods in the business
- 10-year stock CAGR of 15% versus 22% over shorter periods suggests that long-term returns moderate significantly when full cycles are considered
- Commercial vehicle demand is highly correlated with GDP growth, freight rates, and government capex, making earnings vulnerable to macroeconomic slowdowns
- 10-year compounded sales CAGR of 9% reflects the inherently lumpy nature of CV demand, with periods of sharp contraction offsetting boom years
This is AI-generated analysis, not financial advice. Do your own due diligence.
AI News Digest
anthropic claude-opus-4.6 2h ago- EBITDA margin at multi-quarter low Aug 18
EBITDA margin contracted to 10.1% in Q1FY27 from 11.1% YoY and 14.6% in Q4FY26, a 410bp sequential decline driven by raw material and staff cost inflation. Net material cost rose 90bp to 71.54% of revenue.
- M&HCV market share erosion Aug 17
Domestic M&HCV market share fell to 28.6% from 30.2% YoY, a 160bp erosion despite overall volume growth. Bus volumes dragged down M&HCV performance even as truck volumes grew 15%.
- Commodity cost pressure persists Sep 1
CEO Agarwal flagged sharp natural rubber price increases as unprecedented in his 31-year career, with Q2FY27 expected to be the most challenging quarter for input costs before easing in Q3-Q4.
- MarketsMOJO rates stock Sell Sep 8
Rated Sell as of Jun 15, 2026, citing elevated debt levels. Stock shows 10.92% YTD loss, 6.53% decline over three months, and 4.35% drop over six months despite recent weekly gains.
- Export volumes fell 18% Aug 17
Q1FY27 exports declined 18% to 2,461 units due to UAE plant disruptions. Production recovered to ~600 vehicles/month in July versus peak capacity of 800, still a 25% gap.
- Stock fell 4% on strong sales Sep 1
Despite 38% YoY August sales surge, shares dropped 3.98% to ₹168.65 on margin and input cost concerns, reflecting investor skepticism about near-term profitability.
- August sales surge 38% YoY Sep 1
Total sales hit 21,038 units in Aug 2026, beating Nomura's 20,000 estimate. M&HCV trucks led with 60% YoY growth to 10,748 units; LCV sales rose 25% to 7,319 units. Cumulative Jan-Aug sales up 20% to 89,391 units.
- Record Q1 revenue and profit Aug 17
Q1FY27 revenue reached record ₹9,634 crore (up 10.4% YoY) with highest-ever Q1 net profit of ₹609 crore (up 2.59%). Record CV volumes of 48,763 units, marking 14th consecutive quarter of double-digit EBITDA margins.
- Brokerages hike targets post Q1 Aug 17
Four brokerages raised targets: CLSA to ₹196, UBS to ₹210, Kotak to ₹180, Goldman Sachs to ₹175. Emkay retained Buy with ₹240 target; JM Financial maintained Buy at ₹200.
- Net cash up ₹1,432 crore YoY Sep 8
Net cash position improved to ₹2,252 crore as of Jun 30, 2026, a ₹1,432 crore YoY swing, providing financial flexibility for GBP 25M Optare investment and ₹500 crore Hinduja Housing Finance allocation.
- Strong replacement demand cycle Sep 1
CEO Agarwal sees long-term demand driven by ageing fleet (10+ years), rising infrastructure activity, and expanding highways. Management expects industry growth in Q2 to exceed Q1's 13-14%.
- Cost savings program launched Aug 17
Dedicated team targeting ₹2,000 crore in cost savings over 18-24 months via value engineering. M&HCV breakeven volume reduced from 6,000-7,000 to just 1,000-1,500 units/month, sharply cutting cyclical risk.
- EV and battery pack strategy Sep 3
Targeting 50-60% localisation for EV battery packs, setting up manufacturing facility near Chennai with production starting by end-2027. Switch Mobility has 2,100-bus order book and achieved positive EBITDA.
- CEO becomes SIAM president Sep 3
Shenu Agarwal elected SIAM president for 2026-27, succeeding Tata Motors' Shailesh Chandra. The 66th SIAM Conclave emphasized electric mobility transition and positioning India as a global manufacturing hub.
- Analyst meets scheduled Sep 4-11 Sep 7
Ashok Leyland hosting multiple investor meetings: ICICI Securities Auto Tour on Sep 4 in Chennai and UBS India Summit on Sep 11 at Trident Mumbai, with interactive Q&A format and no formal presentation.
- AGM approves ₹3.50 dividend Aug 17
Shareholders approved final dividend of ₹3.50 per share and reappointed key directors at the 77th AGM. All seven resolutions passed.
- MHCV production target 13,000 units Aug 27
Ashok Leyland anticipates MHCV production of 13,000 units for the current month, up from 9,381 units in the year-ago period, with September volumes expected to rise further.
- Saudi Arabia plant in pipeline Aug 17
Final approvals for new Saudi Arabia plant expected within 6-8 weeks, with production likely to begin in 18-24 months, supporting the 20% export-volume CAGR target over 2-3 years.
TL;DR: Ashok Leyland is riding a strong volume cycle with August sales up 38% YoY and record Q1 revenue of ₹9,634 crore, backed by robust replacement demand and a healthy net cash position of ₹2,252 crore. The key risk is margin compression — EBITDA margin fell to 10.1% from 14.6% sequentially due to surging commodity costs, with Q2 expected to be the trough before recovery in H2FY27. M&HCV market share erosion of 160bp and the stock's 11% YTD decline reflect investor caution on profitability despite volume strength. The trend hinges on whether H2FY27 delivers the anticipated commodity cost relief and whether price hikes plus the ₹2,000 crore cost savings program can restore margins toward 12-13%.
Quarterly Results
| Particulars | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 | Sep 2024 | Dec 2024 | Mar 2025 | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 9,691 | 11,429 | 11,093 | 13,542 | 10,724 | 11,148 | 11,995 | 14,696 | 11,709 | 12,577 | 14,830 | 17,246 | 13,070 |
| Expenses | 8,183 | 9,559 | 9,131 | 10,975 | 8,856 | 9,108 | 9,659 | 11,705 | 9,535 | 10,136 | 12,008 | 13,938 | 10,660 |
| Operating Profit | 1,509 | 1,870 | 1,961 | 2,567 | 1,868 | 2,040 | 2,336 | 2,991 | 2,173 | 2,441 | 2,822 | 3,308 | 2,410 |
| OPM % | 16% | 16% | 18% | 19% | 17% | 18% | 19% | 20% | 19% | 19% | 19% | 19% | 18% |
| Other Income | 53 | -1 | 46 | 10 | 36 | 245 | 75 | 22 | 103 | 103 | -140 | 186 | 195 |
| Interest | 655 | 715 | 783 | 829 | 904 | 962 | 1,011 | 1,053 | 1,112 | 1,152 | 1,200 | 1,241 | 1,341 |
| Depreciation | 227 | 227 | 241 | 233 | 235 | 244 | 268 | 340 | 273 | 268 | 282 | 314 | 315 |
| PBT | 679 | 927 | 984 | 1,516 | 765 | 1,078 | 1,132 | 1,621 | 891 | 1,124 | 1,200 | 1,940 | 950 |
| Tax % | 14% | 39% | 38% | 38% | 28% | 29% | 28% | 23% | 26% | 27% | 28% | 29% | 30% |
| Net Profit | 584 | 569 | 609 | 934 | 551 | 767 | 820 | 1,246 | 658 | 820 | 862 | 1,381 | 668 |
| EPS in Rs | 0.93 | 0.9 | 0.95 | 1.45 | 0.87 | 1.2 | 1.3 | 1.92 | 1.04 | 1.29 | 1.38 | 2.2 | 1.05 |
Profit & Loss
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 | TTM |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 15,708 | 21,260 | 22,871 | 29,636 | 33,197 | 21,951 | 19,454 | 26,237 | 41,673 | 45,703 | 42,333 | 48,314 | 57,723 |
| Expenses | 14,191 | 18,281 | 19,826 | 25,387 | 28,287 | 18,718 | 16,992 | 23,472 | 36,580 | 37,848 | 39,327 | 45,617 | 46,741 |
| Operating Profit | 1,517 | 2,979 | 3,045 | 4,248 | 4,910 | 3,233 | 2,462 | 2,765 | 5,093 | 7,856 | 3,006 | 2,697 | 10,982 |
| OPM % | 10% | 14% | 13% | 14% | 15% | 15% | 13% | 11% | 12% | 17% | 7% | 6% | 19% |
| Other Income | -106 | -321 | 406 | 190 | 139 | 57 | 207 | -230 | 169 | 160 | 6,607 | 8,300 | 343 |
| Interest | 872 | 925 | 1,049 | 1,227 | 1,502 | 1,802 | 1,901 | 1,869 | 2,094 | 2,982 | 3,930 | 4,705 | 4,933 |
| Depreciation | 580 | 524 | 573 | 646 | 676 | 750 | 836 | 866 | 900 | 927 | 1,087 | 1,138 | 1,179 |
| PBT | -42 | 1,209 | 1,829 | 2,565 | 2,872 | 739 | -67 | -200 | 2,269 | 4,106 | 4,596 | 5,155 | 5,213 |
| Tax % | 415% | 41% | 11% | 29% | 24% | 38% | 4% | 43% | 40% | 34% | 26% | 28% | — |
| Net Profit | -205 | 712 | 1,633 | 1,814 | 2,195 | 460 | -70 | -285 | 1,362 | 2,696 | 3,383 | 3,721 | 3,731 |
| EPS in Rs | 0.24 | 1.2 | 2.79 | 3.01 | 3.54 | 0.57 | -0.28 | -0.61 | 2.11 | 4.23 | 5.29 | 5.91 | 5.92 |
| Div. Payout % | 96% | 40% | 28% | 40% | 44% | 44% | -107% | -82% | 62% | 59% | 59% | 59% | — |
Balance Sheet
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity Capital | 285 | 285 | 285 | 293 | 294 | 294 | 294 | 294 | 294 | 294 | 294 | 587 |
| Reserves | 4,227 | 4,979 | 6,108 | 7,128 | 8,452 | 7,495 | 7,568 | 7,010 | 8,260 | 8,711 | 11,938 | 13,654 |
| Borrowings | 9,070 | 11,054 | 13,168 | 15,791 | 19,168 | 22,417 | 24,077 | 24,145 | 31,161 | 40,802 | 49,962 | 63,936 |
| Other Liabilities | 6,011 | 5,806 | 7,048 | 10,171 | 11,212 | 7,924 | 10,119 | 12,125 | 14,965 | 17,788 | 19,352 | 22,527 |
| Total Liabilities | 19,592 | 22,123 | 26,609 | 33,383 | 39,126 | 38,130 | 42,058 | 43,574 | 54,679 | 67,595 | 81,546 | 1,00,704 |
| Fixed Assets | 6,529 | 5,890 | 6,591 | 6,596 | 6,695 | 8,031 | 8,484 | 7,895 | 8,129 | 8,157 | 8,837 | 10,435 |
| CWIP | 216 | 87 | 244 | 439 | 678 | 574 | 336 | 240 | 268 | 415 | 577 | 940 |
| Investments | 1,499 | 1,031 | 1,933 | 4,383 | 1,492 | 960 | 1,096 | 2,652 | 4,852 | 2,329 | 6,610 | 7,467 |
| Other Assets | 11,348 | 15,115 | 17,841 | 21,965 | 30,261 | 28,565 | 32,143 | 32,787 | 41,430 | 56,695 | 65,523 | 81,862 |
| Total Assets | 19,592 | 22,123 | 26,609 | 33,383 | 39,126 | 38,130 | 42,058 | 43,574 | 54,679 | 67,595 | 81,546 | 1,00,704 |
Cash Flow
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating | 95 | -1,275 | 270 | 1,462 | -3,745 | 383 | -1,065 | 2,845 | -4,499 | -6,258 | 128 | -4,895 |
| Investing | -124 | 456 | -1,676 | -3,163 | 1,897 | -1,201 | -973 | -1,917 | -2,904 | 1,135 | -5,759 | -6,986 |
| Financing | 781 | 1,660 | 738 | 1,905 | 2,398 | 1,239 | 1,331 | -378 | 7,281 | 8,432 | 6,958 | 11,617 |
| Net Cash Flow | 752 | 841 | -668 | 205 | 549 | 421 | -707 | 550 | -122 | 3,309 | 1,327 | -264 |
| Free Cash Flow | 162 | -1,331 | -166 | 823 | -4,841 | -940 | -1,791 | 2,443 | -5,353 | -7,346 | -1,471 | -7,712 |
| CFO/OP | 14 | -25 | 24 | 48 | -61 | 19 | -45 | 105 | -77 | -69 | 43 | -129 |
Ratios
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debtor Days | 31 | 25 | 20 | 14 | 30 | 25 | 57 | 45 | 37 | 31 | 29 | 23 |
| Inventory Days | 58 | 50 | 73 | 42 | 52 | 42 | 76 | 53 | 44 | 50 | 49 | 50 |
| Days Payable | 108 | 71 | 85 | 96 | 88 | 90 | 162 | 150 | 96 | 85 | 99 | 100 |
| Cash Conversion Cycle | -19 | 5 | 8 | -39 | -6 | -22 | -30 | -52 | -16 | -4 | -21 | -26 |
| Working Capital Days | -41 | -23 | -21 | -54 | -13 | -31 | -44 | -52 | -34 | -45 | -37 | -49 |
| ROCE % | 8% | 17% | 15% | 17% | 16% | 9% | 5% | 6% | 11% | 15% | 14% | 14% |
Insights
BetaAI-extracted from concalls & annual reports · figures as reported, with sources
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Company Information
Ashok Leyland is the flagship Company of the Hinduja group, having a long-standing presence in the domestic medium and heavy commercial vehicle (M&HCV) segment. The company has a strong brand and well-diversified distribution and service network across the country and has a presence in 50 countries, it is one of the most fully-integrated manufacturing companies. Its headquarter is in Chennai [1] They manage driver training institutes across India and have trained over 8,00,000 drivers since inception. [1]
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