Nirmal Bang raises target price and praises the company’s expanding non-truck businesses, suggesting a more resilient earnings profile amid a successful Q1 performance.
Nirmal Bang has kept a buy rating on Ashok Leyland after the commercial vehicle maker’s latest quarterly update, saying the company’s expanding mix of businesses beyond trucks is making earnings steadier and less tied to the cycle. The brokerage has lifted its target price to Rs197 from Rs172, implying roughly 15% upside, and said the stock’s appeal lies in a broader revenue base that now includes defence, aftermarket services, power solutions and financial services.
According to the brokerage, those non-truck activities now account for about 45% to 50% of revenue, a shift it says has reduced volatility and lowered the company’s break-even point. Nirmal Bang argued that a richer mix, tighter cost control and a rising contribution from non-commercial vehicle segments should support margins and improve profit resilience over the medium term.
The call follows a strong first quarter, when Ashok Leyland reported a sharp jump in profit and sales. Nirmal Bang’s report said net profit rose 747% year on year to Rs576 crore, while revenue increased 13% to Rs8,189 crore. Business Standard reported that EBITDA margin widened to 10% from 4.4% a year earlier, underscoring the improvement in operating performance.
Other brokerages have also turned more constructive on the stock after the results. Axis Securities, according to Financial Express, maintained a buy recommendation and increased its target to Rs210, citing healthy gross margins and a supportive outlook for the commercial vehicle industry. The broader message from analysts is that Ashok Leyland’s recent performance has been helped not just by demand recovery, but by a more diversified business model that may help cushion the company if truck demand softens.
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