GAL projected to reach target price of Rs860 per share

June 15, 2026 (MLN): Ghandhara Automobiles Ltd (PSX:GAL) is projected to reach a target price of Rs860 per share by June 2027, which is around 60% increase from current level of Rs527.

The company's earnings estimates for FY26E and FY27F have been raised significantly by 20% and 17% respectively, by JS Global.

This upward adjustment stems from a stellar 112% year-on-year boom in commercial vehicle demand during the first ten months of FY26, alongside expanding profit margins and stronger performance from its subsidiary operations.

The positive trajectory is also heavily backed by strong volume growth at GAL's associate company, Ghandhara Industries Ltd (GHNI), in which GAL holds a 17.91% stake.

GHNI saw its own volumes rise by 79% in 10MFY26 and is strategically positioned to benefit from upcoming large-scale mining ventures in Pakistan, such as the Reko Diq project, through the planned introduction of specialized mining trucks.

Furthermore, GAL is preparing to introduce the plug-in hybrid electric vehicle (PHEV) variant of the JAC-T9 at the beginning of FY27.

This new model is expected to bolster its product portfolio despite a more competitive automotive landscape and shifting sales tax dynamics.

Credit brokerage JS Global reiterated its "Buy" rating on GAL, emphasizing that the stock remains attractively valued at just 3.9x FY26E and 3.8x FY27F earnings.

Even after a 45% run-up in its share price following a recent ceasefire announcement, the stock still trades 11.5% below its pre-conflict peak, signaling potential upside for investors as core commercial vehicles increasingly drive the company's long-term profitability.

Table 1: Key Financial Estimates

The company’s top and bottom-line growth show a dramatic turnaround starting from FY25, stabilizing into steady growth through FY27F.

Operational Tailwinds and Risk Factors

The core commercial vehicle segment is becoming the prime driver for GAL, with its contribution to the company's total profit after tax (PAT) projected to scale up from 72% in FY26E to 89% by FY31F.

This structural shift points to a more sustainable business model rooted in commercial logistics rather than reliance on consumer-focused passenger segments.

However, the brokerage notes a few downside risks that investors should keep in mind:

Taxation Changes: The removal of concessionary sales tax on PHEVs (increasing the rate from 8.75% to 18%) in the FY27 budget might pressure the initial pricing strategy of the upcoming JAC-T9 PHEV variant.

Conversely, a proposed 2% cut in the super tax could provide an earnings upside of over 3% if officially passed.

Competition: Rising competition in the pickup truck segment and the introduction of a low 1% concessionary sales tax on imported CBU electric trucks could challenge market share.

Macroeconomic Factors: Renewed monetary tightening, escalating consumer financing rates, or unexpected execution delays in Pakistan’s major mining projects could slow down heavy commercial vehicle (HCV) volume momentum.

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