Ashok Leyland loses momentum after rally

After gaining over 13% in the last week, shares of commercial vehicle major Ashok Leyland fell 5.5% on Monday. Analysts expect the stock to underperform in the medium term due to the company's increased vulnerability to growing competition in the industry.

The weakness in the counter was also attributed to concerns over the impact of rising costs, financing rates and limited scalability of business on the company's prospects.

The company posted muted third-quarter results with net profit of 43 crore after adjusting for higher one-time staff-related expense, which was below market expectations.

However, the positive factor, according to analysts, is that Ashok Leyland has undertaken a major branding exercise as part of which the Hinduja group company will change its logo, name and also category segmentation.


(Contributed by Harish Rao & Shailesh Menon)