Automotive Axles shares jump 5%; Axis Securities sees further upside potential
Explaining the rationale, the domestic brokerage noted that MHCV (medium and heavy commercial vehicle) production volumes are expected to see mid-single-digit YoY growth post H2FY26 (~400 MHCV volumes).
- Sep 22, 2025,
- Updated Sep 22, 2025 1:12 PM IST
Shares of Automotive Axles Ltd (AAL) surged 4.99 per cent in Monday's trade to touch a high of Rs 1,846.85. Axis Securities has recommended a 'Buy' call on the stock, citing further upside potential.
Explaining the rationale, the domestic brokerage noted that MHCV (medium and heavy commercial vehicle) production volumes are expected to see mid-single-digit YoY growth post H2FY26 (~400 MHCV volumes). The management anticipates a gradual recovery in Europe and the US, which could improve CV volumes from CY27 onwards.
"Industry registered 8.6 Mn tonnage in FY25 vs 8.7 Mn tonnage in FY18-19 (peak); however, only 10.3 Lc units were produced in FY25 vs 11.1 Lc units in the respective periods. This indicates a shift to higher tonnage per vehicle, resulting in better EBITDA/axle realisation by up to 25 per cent from FY19. The company has entered a new business model and a Service Agreement with Meritor HVS (India) Ltd, under which Auto Axles will sell products directly to OEMs from April 1, 2025. We believe this will be margin accretive and improve cash flows," Axis added.
The brokerage highlighted key growth drivers: "(1) Product diversification into new bus axles, with commercial production of axles for 13.5/15 mt buses expected by FY26-end, subject to finalisation of OEM agreements; (2) Electric vehicle (EV) axles; (3) Increased export share following plant modernisation, with parent company Meritor expected to play a key role; (4) Expansion of the aftermarket business."
Axis further noted, "The CV industry has seen higher tonnage growth over the past two years, despite production volumes remaining below FY19 peaks. We anticipate positive volumes in the goods carrier segment in H2FY26E, while the passenger carrier CV segment is expected to see mid-single-digit growth. We forecast an EBITDA CAGR of 19 per cent for FY25–27E, supported by direct sales to OEMs, new product launches and cost-control measures, assuming stable commodity prices."
Based on these factors, the brokerage has set a target price of Rs 1,935 per share for AAL shares.
Shares of Automotive Axles Ltd (AAL) surged 4.99 per cent in Monday's trade to touch a high of Rs 1,846.85. Axis Securities has recommended a 'Buy' call on the stock, citing further upside potential.
Explaining the rationale, the domestic brokerage noted that MHCV (medium and heavy commercial vehicle) production volumes are expected to see mid-single-digit YoY growth post H2FY26 (~400 MHCV volumes). The management anticipates a gradual recovery in Europe and the US, which could improve CV volumes from CY27 onwards.
"Industry registered 8.6 Mn tonnage in FY25 vs 8.7 Mn tonnage in FY18-19 (peak); however, only 10.3 Lc units were produced in FY25 vs 11.1 Lc units in the respective periods. This indicates a shift to higher tonnage per vehicle, resulting in better EBITDA/axle realisation by up to 25 per cent from FY19. The company has entered a new business model and a Service Agreement with Meritor HVS (India) Ltd, under which Auto Axles will sell products directly to OEMs from April 1, 2025. We believe this will be margin accretive and improve cash flows," Axis added.
The brokerage highlighted key growth drivers: "(1) Product diversification into new bus axles, with commercial production of axles for 13.5/15 mt buses expected by FY26-end, subject to finalisation of OEM agreements; (2) Electric vehicle (EV) axles; (3) Increased export share following plant modernisation, with parent company Meritor expected to play a key role; (4) Expansion of the aftermarket business."
Axis further noted, "The CV industry has seen higher tonnage growth over the past two years, despite production volumes remaining below FY19 peaks. We anticipate positive volumes in the goods carrier segment in H2FY26E, while the passenger carrier CV segment is expected to see mid-single-digit growth. We forecast an EBITDA CAGR of 19 per cent for FY25–27E, supported by direct sales to OEMs, new product launches and cost-control measures, assuming stable commodity prices."
Based on these factors, the brokerage has set a target price of Rs 1,935 per share for AAL shares.