Ashok Leyland has been given an 'ACCUMULATE' rating by KR Choksey, with a target price of INR 252 per share, indicating a potential upside of 14%.

In the second quarter of FY25, the company reported a decline in sales of 8.5% YoY, with 45,624 vehicles sold, and a 9.0% decrease in revenue to INR 87,689 million. Gross margins improved by 235 basis points YoY to 28.8% due to positive operating performance. EBITDA for the quarter was INR 10,173 million, down 5.8% YoY but exceeded estimates by 4.3%. The EBITDA margin expanded to 11.6%, up 40 basis points YoY. Adjusted PAT increased by 11.8% YoY to INR 6,527 million, supported by strong operating performance and increased other income, despite some exceptional items.

KR Choksey has revised its FY25E and FY26E EPS estimates downward by 10.8% and 9.2% respectively, citing weak demand in the medium and heavy commercial vehicle (MHCV) segment, lower vehicle realizations, and increased competition as factors that may impact future profitability. The firm has adjusted its P/E multiple to 20x for FY26E EPS of INR 12.8, down from INR 14.1.