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Investing.com - Goldman Sachs downgraded Ashok Leyland Ltd. (NSE:ASHOKLEY) from Buy to Neutral with a price target of INR140.00, citing limited upside potential.
The downgrade follows a 58% increase in Ashok Leyland’s stock price since Goldman Sachs’ previous upgrade to Buy on July 24, 2023, significantly outperforming both the NIFTY 50 (+28%) and BSE30 (+24%) during the same period.
Goldman Sachs believes its earlier thesis regarding a pickup in higher tonnage vehicles and improving margin environment for the commercial vehicle industry is now accurately reflected in the current stock price.
The investment bank expects car volume growth to exceed commercial vehicle volume growth over the next 12 months, citing a broader economy-wide shift away from capital expenditure and toward consumption.
Potential downside risks include further government pivot away from capital expenditure, as the majority of Ashok’s commercial vehicle revenue comes from capital-intensive sectors like steel, cement, coal, mining, and real estate, along with a slight overhang on road freight from the upcoming North West Dedicated Freight corridor scheduled to begin operations in early 2026.
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