India’s truck market is defying the odds. 2 stocks to watch

The Indian economy, like other economies in the region, has been hit hard by the Middle East crisis, in terms of higher petroleum product prices, and economists / investors have been keen to understand the local impact.  The central government has not yet released data for the first quarter of FY27.

As a result, there is considerable attention on the results of CV makers, as they are often a ‘mirror’ to study the cyclical nature of infrastructure development and business activity in a country.  That’s because the commercial vehicles sector, which transports daily essentials like fruits and vegetables alongside industrial materials like cement and steel, provides vital information on broader economic trends.

Q1 FY27 Operational Check: Tata Motors’ 26% Volume Surge Meets a 10.2% Margin Wall

The recently relisted Tata Motors, largest player in the CV segment, highlighted that its sales of CV grew nearly 26% y-o-y to 108,700 units and that was thanks to a 35% y-o-y growth in SCV PU (small commercial vehicles and pick-ups) to 38,300 units.  The company has pointed out to strong demand for models like Ace Diesel LNT and Ace Pro in the SCV PU segment.

Strong growth in commercial vehicles helped Tata Motors domestic market share rise 100 basis points to 36.8% in the quarter under review, as per Vahan.   

Girish Wagh, MD and CEO, Tata Motors Ltd, in a press release said, “The commercial vehicle industry remained resilient in Q1 FY27 supported by India’s strong economic fundamentals, healthy fleet utilization, and sustained demand across key sectors.”

The commercial vehicle segment has continued to benefit from the various measures taken by the RBI and the central government to boost economic activity in the country, and in the June 2026 quarter the sector did not face any headwinds from the Middle East crisis. 

In addition, the GST on trucks, buses and commercial vehicles was reduced to 18% from the earlier 28%, from 22 September, 2025.

For perspective, Tata Motors total CV sales grew 25% y-o-y to 1.32 lakh units in the March 2026 quarter. And Tata Motors’ sales grew 20.7% y-o-y to 115,577 units in the December 2025 quarter.

Strong vehicle sales in the June 2026 quarter helped Tata Motors standalone revenue from operations grow 23.3% y-o-y to Rs 19,329 crore. However, it faced a higher cost structure, especially from steel and copper.

Higher input costs resulted in Tata Motors’ operating profit margin declining marginally y-o-y to 10.2%.  Nevertheless, strong vehicle sales helped the company’s standalone net profit to rise nearly 8.3% y-o-y to Rs 1,528 crore.   

Tata Motors vs Ashok Leyland: Head-to-Head Q1 Financial & Volume Metrics

Ashok Leyland Posts Record ₹9,634 Cr Revenue as LCV Demand Defends Profitability

 On Friday, Ashok Leyland reported its quarterly results – its highest ever commercial vehicle sales of 48,763 units, a growth of 10.2% y-o-y. The company benefited from a 20% y-o-y growth in LCV (light commercial vehicles) for models like Dost, Bada Dost, and Partner trucks. 

As a result, the company reported its highest ever standalone revenues in the first quarter of a financial year of Rs 9,634 crore, a growth of 10.4% y-o-y. Rising input costs hurt Ashok Leyland too, and its operating profit margin declined 110 basis points y-o-y to 10%.

However, strong vehicle sales helped the company report highest Q1 standalone net profit of Rs 609 crore, a growth of 2.7% y-o-y. 

For both the companies, the core auto business is reflected in their standalone results.    

Pipeline & Strategic M&A: ₹4,500 Cr Order Backlog and Iveco Integration

The two leading players in the commercial vehicle industry will be focused on managing rising input costs through cost synergies and higher prices, going forward.

Tata Motors has highlighted, in the short-term, it will be focused on executing nearly Rs 4,500 crore government, defence and state transport orders, including 850 e-buses.

Tata Motors had earlier launched 17 trucks in different segments of commercial vehicles and they should provide the growth momentum, going forward.

The company in July, 2025, had acquired Italy-based Iveco’s commercial vehicle business for nearly €3.8 billion (approximately Rs 38,200 crore), and it has highlighted regulatory approvals are in the final stage, with only one pending approval to be received. Also, all the queries of the competent authority have been addressed, and the final clearance is expected to be received by end of August 2026, the company highlighted.

Once, all regulatory approvals are completed, the merged entity will get the benefit of sales growth of commercial vehicles from fast growing economies in North Africa and Eastern Europe, amongst other regions.

Ashok Leyland had also launched recently several trucks with enhanced payload.

The expansion plans of both the CV makers highlights their confidence in the Indian and global economy, and their respective growth prospects, despite the Middle East war. Governments in India and overseas have taken several policy measures including lower taxes and central banks have kept interest rates low, and enabled economies to grow, despite the challenges.

This is clearly reflected in the confidence of CV makers, going forward.  

Capital Efficiency Spread: Why Tata Motors Delivers 53.6% RoE vs Ashok Leyland’s 30.2%

Tata Motors has a standalone return on equity of 53.6%, according to Screener.in, and for Ashok Leyland it was 30.2%.  

Valuation Divergence: Assessing Risk-Reward at 25x–27x P/E Multiples

Tata Motors ended 0.4% lower at Rs 472 on Monday. The stock trades at a standalone P/E of 25.8 times, according to Screener.in.

And Ashok Leyland gained 3.3% at Rs 177.5 on Monday. The stock trades at a standalone P/E of 27.1 times.

Valuations of CV makers

The commercial vehicle segment is expected to grow going forward, despite the Middle East crisis.

For Tata Motors once all regulatory approvals are in place, the merged entity should benefit from Italy-based Iveco’s presence in fast growing markets in North Africa and Eastern Europe.

Also, both the players are once again expected to benefit from strong local CV sales going forward, given the policy measures taken by both the RBI and the central government. That is also reflected in the confidence of both the leading CV makers and their expansion plans, in terms of new models and expanding into new geographies.

Readers can put Tata Motors and Ashok Leyland on their watch list of stocks for 2026  and see if their performance matches expectations.

Disclaimer:

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article. 

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