Ashok Leyland Tops Auto Picks Ahead Budget 2026

Ashok Leyland Emerges as BNP Paribas’ Top Auto Pick
BNP Paribas has highlighted Ashok Leyland as its preferred stock in India’s commercial vehicle (CV) sector, citing strong performance, rising demand, and government infrastructure support. Analysts say investors should focus on the upcoming Budget 2026 rather than recent trade deal headlines that have caused temporary volatility in auto stocks.

Infrastructure Spending to Drive CV Demand
Infrastructure development is critical for the commercial vehicle industry since trucks and buses are directly tied to construction, roads, and logistics activities. BNP Paribas believes that continued government spending on infrastructure will drive higher CV demand, allowing manufacturers like Ashok Leyland to manage rising raw material costs without significant impact on margins. The brokerage also expects a CV upcycle, leading to stronger volumes and more visible earnings in the coming years.

Ashok Leyland’s Strong Performance in Q2 FY26
The company reported operating revenue of Rs 12,577 crore in Q2 FY26, up 13 percent year-on-year and 7.4 percent quarter-on-quarter. Net profit rose to Rs 820 crore, reflecting a 7 percent increase from the previous year and a 25 percent quarter-on-quarter jump. This growth was supported by robust performance in both the medium and heavy commercial vehicle (MHCV) and light commercial vehicle (LCV) segments.

Market Share Gains and Export Growth
During Q2, Ashok Leyland sold 21,647 MHCV trucks and 4,660 buses domestically, increasing its H1 MHCV market share to 31 percent. In the LCV segment, it sold 17,697 units, raising its H1 market share to 13.2 percent. Export volumes surged 45 percent year-on-year, driven by demand from GCC, Africa, and SAARC regions. Aftermarket, power solutions, and defense businesses also posted strong growth of 11 percent, 14 percent, and 25 percent respectively.

Cost Management and Strategic Moves
Despite industry-wide cost pressures, Ashok Leyland maintained material costs at 71.2 percent of revenue through effective cost management and improved pricing. Additionally, the company entered the battery manufacturing sector, aligning with government policy support for electric vehicles and the broader shift toward clean mobility.

Analyst Take: Focus on Budget 2026
BNP Paribas emphasizes that concerns over the India-EU Free Trade Agreement (FTA) are overstated, as most Indian vehicles are locally assembled. The brokerage believes that Ashok Leyland’s strong fundamentals, combined with an improving CV cycle and supportive government policies, make it the top pick for investors ahead of Budget 2026, expected to kick off on February 1, 2026.