Ashok Leyland shares fall as Goldman downgrades on limited upside

Shares of Ashok Leyland Ltd., one of India's largest commercial vehicle makers, opened with losses of up to 3% on Wednesday, September 24, following a downgrade by a global brokerage.

Goldman Sachs downgraded Ashok Leyland to 'Neutral' with a price target of ₹140, citing limited upside after the recent rally.

The brokerage said that the thesis around a shift toward higher-tonnage vehicles and an improving margin environment for the commercial vehicle industry is now largely reflected in the current stock price.

Goldman Sachs also said that, with the broader economy moving away from capex and toward consumption, car volume growth is expected to outpace commercial vehicle volume growth over the next 12 months.

The brokerage pointed to potential upside risks, including a pickup in replacement demand due to an aging fleet, second-order benefits from stronger consumption-focused sectors across the economy, and better-than-expected growth in light commercial vehicle volumes, particularly with Ashok Leyland's recently launched Saathi range of light trucks.

In a recent interaction with CNBC-TV18, Shenu Agarwal, Managing Director and CEO of Ashok Leyland said that he expects strong tailwinds from the recent GST rate reductions.

Agarwal explained that the reduction in diesel vehicle tax from 28% to 18% will directly improve customer economics, but he stressed that the real boost will come from higher consumption driving freight demand.

"The biggest trigger for us is not the cut in the price, but this freight traffic, which will increase, which will directly impact the industry in terms of needing more trucks and more buses to be able to carry these goods and passengers," he said.

While precise growth projections for FY26 remain uncertain, Ashok Leyland expects demand to surpass initial industry expectations of 3-5% growth in trucks.

The company has also stepped up its overall capex, with spending in FY26 expected to cross ₹1,000 crore, more than double the levels of recent years, as it prepares for a transition to cleaner and more sustainable mobility.

Of the 44 analysts that have coverage on Ashok Leyland, 33 of them have a 'Buy' rating, seven have a 'Hold' rating, and four others have a 'Sell' recommendation on the stock.

Ashok Leyland shares are now trading 2.36% lower at ₹140.70. The stock is up 35% on a year-to-date basis.