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Informist, Tuesday, Jun. 16, 2026

MUMBAI - Kotak Securities upgraded its rating on Tata Motors Ltd. to 'buy' from 'add' and on Ashok Leyland to 'add' from 'reduce' following the recent correction in their stock prices, as the risk-reward has turned favourable, according to its report on Monday. The firm expects India's medium-heavy commercial vehicles industry to grow in low single digit in 2026-27 (Apr-Mar) after a strong FY26, it said. The expected low growth in FY27 for the medium-heavy commercial vehicle industry is in part because of a high base effect. 

"...though a likely US-Iran deal could ease diesel price volatility and provide a floor to fleet purchase decisions," it said. Prices of diesel form around 30-50% of the total cost of ownership for fleet operators. Fuel prices had shot up in recent months because of the war in the Persian Gulf, before retreating below $100 per barrel, yet they remain much higher than before the war erupted.

Tailwinds such as sustained government capex on infrastructure, replacement demand from an ageing fleet and healthy utilisation levels should keep underlying demand supportive, Kotak Securities said. "However, price increases, owing to higher input costs (steel, tyres, and base metals), a high base and monsoon uncertainty are likely to cap the pace of growth in FY2027E for the M&HCV industry, in our view," it added.

With the war now potentially coming to a close after the US and Iran reached a framework agreement, the commercial vehicle industry may continue to grow, albeit at a slower pace, Kotak Securities said. Sales of Tata Motors are expected to grow faster than the industry because of a refreshed next-generation portfolio of trucks that have a higher power output and superior fuel efficiency, its vehicle platform, which reduces downtime. The company's market share across most segments has gained 100-300 basis points in the last two months, Kotak Securities said.

As such, the firm has increased estimates for Tata Motors' consolidated earnings before interest, tax, depreciation, and amortisation by 1-5% for FY27-FY29. Despite upgrading the rating on Chennai-based Ashok Leyland, Kotak Securities has left expectations for growth in the company's consolidated EBITDA unchanged. Ashok Leyland's volume is expected to grow at a compound annual rate of 4-5% over FY26-FY29 due to 7% growth in exports, 4-5% growth in sales of domestic light commercial vehicles, medium-heavy commercial vehicles, and buses segments. 

For the March quarter, Tata Motors had reported a net profit of INR 24.06 billion on revenue of INR 244.52 billion, while Ashok Leyland's net profit stood at INR 14.05 billion on revenues of INR 141.60 billion.

At 1358, shares of Tata Motors traded 0.8% lower at INR 403.20 and shares of Ashok Leyland were up 0.8% at INR 158.95 on the National Stock Exchange.   End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Anand JC

Edited by Avishek Dutta

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