This is a sector that rides directly on the ‘India growth story’ and often also serves as a benchmark to study the cyclical nature of infrastructure development and business activity in the country.
Yes, we are referring to the commercial vehicles sector, which transports daily essentials like fruits / vegetables along with materials needed for infrastructure development, like cement and steel, amongst other critical inputs.
The CV sector had earlier faced sluggish growth – Ashok Leyland, the second-largest player in the commercial vehicle segment, had reported broadly flat vehicle sales y-o-y at 44,238 units in the June 2025 quarter.
The RBI and the central government have taken several steps since then to boost economic activity in the country via reduction in loan / credit rates and the rehauling of GST rates, respectively. Specifically, the GST on trucks, buses and commercial vehicles was reduced to 18% from the earlier 28%, from 22 September, 2025.
The combination of above measures resulted in Ashok Leyland’s vehicle sales volume growing nearly 9% y-o-y in September 2025 quarter, and 25.4% y-o-y in the December 2025 quarter.
Investor bullish on CV stocks
The revival in sales of commercial vehicles has helped to drive investor interest in the two largest CV stocks – The recently relisted Tata Motors, India’s largest CV player, houses the group’s core commercial vehicle and allied businesses, was down 1.6% in mid Thursday trade at Rs 481.6. The stock had reached Rs 500 on 12 February, 2026.
Nearest rival, Ashok Leyland, also down 0.7% at Rs 207 in mid-Thursday trade, and not too far from its 52-week high of Rs 215.4 that was reached on 11 February, 2026.
Decoding the Q3 FY26 Revival: Revenue and Sales Volume
December 2025 quarter – operational performance
| Standalone revenue growth (%) | Vehicle sales growth (%) | Net profit growth (%) | |
| Ashok Leyland | 21.7% | 25.4% | 4.6% |
| Tata Motors | 19.7% | 20.7% | -60% |
Ashok Leyland: LCV Dominance and Record Profits
The Chennai-based company’s sales volume grew 25.4% y-o-y to 58,412 units in the December 2025 quarter, and that was thanks to a 30% jump in sales volume related to light commercial models like Ashok Leyland Dost and Ashok Leyland Saathi.
The sales volume growth of the company in Q3FY26 was much stronger than that recorded in September 2025 quarter and June 2025 quarter.
The company has highlighted its domestic market share in the medium and heavy commercial vehicle segment was above 30% in Q3FY26.
Strong vehicle sales helped its standalone revenue from operations rise 21.7% y-o-y to Rs 11,533.9 crore in Q3FY26. Its operating profit margin rose 50 basis points y-o-y to 13.3% in Q3FY26, and the company was able to offset higher input costs, like steel and copper.
The company took a one-time hit of Rs 308.5 crore related to the new labour code, and its standalone net profit grew just 4.6% y-o-y to Rs 796 crore in the December 2025 quarter. Nevertheless, the company highlighted its net profit in Q3FY26 was its all-time high (aside of the impact of the labour code).
The company’s core auto business in the country is reflected in its standalone results.
Tata Motors: Heavy Vehicles and Global Ambitions
The Mumbai-based player’s sales grew 20.7% y-o-y to 115,577 in the December 2025 quarter, and that was driven by 23% rise in heavy commercial vehicle sales of its Tata Prima and Tata Signa range. Also, its exports jumped 70% y-o-y in the quarter under review.
Strong growth helped the company’s share in domestic commercial vehicle segment reach 35.5% in Q3FY26 as against 34.5% in Q2FY26, according to the investor presentation.
In a press release dated 1 January, 2026, Girish Wagh, MD & CEO, Tata Motors Ltd, said, “The company registered double-digit sales growth in Q3FY26, powered by a strong rebound in construction and mining activity post the extended monsoon along with sustained demand from core sectors and auto logistics.”
As a result, Tata Motors standalone revenue from operations grew 19.7% y-o-y to Rs 20,404 crore in the December 2025 quarter.
Its operating profit margin grew 170 basis points to 11.7% in Q3FY26, and the strong uptick in demand helped the company to offset higher input costs like steel and copper.
The company had exceptional expenses of Rs 1,545 crore in Q3FY26 including Rs 574 crore relating to the new labour code. As a result, standalone net profit slumped nearly 60% y-o-y to Rs 561 crore in the December 2025 quarter.
The company’s core auto business in India is reflected in the standalone quarterly results.
Growth plans – riding the upturn in CV sector with product launches
Tata Motors had recently launched 17 trucks in different segments of commercial vehicles, and the sales momentum from the wider range is expected over the next few quarters.
In addition, the company in late July, 2025, had acquired Italy-based Iveco’s commercial vehicle business for nearly €3.8 billion (approximately Rs 38,200 crore), and it is currently in the process of obtaining all regulatory approvals. The above acquisition, once completed, will enable Tata Motors to significantly grow its presence in Europe, Middle East and Africa.
Ashok Leyland had recently launched its all-new HIPPO (range from light to heavy commercial vehicles, and TAURUS (catering to heavy CV segment), and the benefits to the company will be visible over the next few quarters.
Valuations and investors on Dalal Street
Ashok Leyland had a return on equity of 31.4%, according to Screener.in, and for the recently listed Tata Motors it is negative.
The recently listed Tata Motors entity is expected to see a sharp improvement in its performance on this parameter as its operations stabilise.
Ashok Leyland trades on a standalone P/E of 32.5, according to Screener.in, and over the past 5 years it has traded in a range between 19.4 times and 111 times.
Tata Motors trades at standalone P/E of more than 75 times.
An alternative way to value CV companies is on the valuation matrix – enterprise value (EV) to EBITDA.
For Ashok Leyland, it is nearly 32.5 times for the first 9 months of FY26. For the newly listed Tata Motors it is about 30 times, according to data from quarterly results and Screener.in
CV stocks are a way to play the infrastructure and ‘India Growth Story’ over the next few years. Investors can put these stocks on their watchlist for 2026.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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