**Ashok Leyland Reports Record Profit Amid Rising Demand and Lower Input Costs**
Ashok Leyland, India’s second-largest commercial vehicle manufacturer, exceeded market expectations by achieving its highest-ever profit for the October-December quarter, driven by reduced input costs and a rebound in truck demand. As of December 31, the company has become net debt-free, boasting a net cash position of ₹958 crore, a significant improvement from a net debt of ₹1,747 crore a year earlier.
The truck and bus manufacturer plans to invest ₹200 crore in its lending subsidiary, Hinduja Leyland Finance, and ₹500 crore in its electric vehicle division, Optare, which produces electric buses under the Switch brand. During the April-December period, Ashok Leyland maintained a market share of just over 30% in India’s medium and heavy commercial vehicles (MHCV) sector, trailing only Tata Motors, which accounts for nearly half of the vehicles sold in this category. Dheeraj Hinduja, the executive chairperson, announced a medium-term goal of achieving a 35% market share in the MHCV segment.
In the October-December quarter, Ashok Leyland sold 26,838 MHCVs, marking a 1% decline year-on-year but a notable recovery from the previous quarter, which saw a more than 10% drop in sales. Shenu Agarwal, the managing director, noted that MHCV industry sales in January were 4-5% higher compared to the previous year, with a positive outlook for February and March, indicating a strong fourth fiscal quarter ahead.
Exports during the December quarter surged by one-third to 4,151 units, primarily consisting of buses. The company is focusing on expanding its exports of MHCVs, particularly targeting the Middle Eastern markets, including the UAE and Saudi Arabia. Hinduja mentioned that the company is developing trucks with export potential to diversify its offerings beyond buses.
For the quarter, Ashok Leyland reported a standalone revenue of ₹9,479 crore, a 2% increase year-on-year, despite a decline in sales volume. The profit reached ₹762 crore, reflecting a 31% year-on-year increase and surpassing the ₹665-crore consensus estimate from Bloomberg analysts. The company also recorded a deferred tax gain of ₹123 crore during the quarter. Earnings before interest, tax, depreciation, and amortization (Ebitda) rose by 9% year-on-year to ₹1,211 crore, with the Ebitda margin expanding by 76 basis points to 12.8%. The improvement in Ebitda margins was largely attributed to a significant drop in steel prices, which were over 10% lower year-on-year during the quarter, as noted by K.M. Balaji, the chief financial officer.
Following the earnings announcement, Ashok Leyland’s stock rose by 7.9% on the BSE, closing at ₹219.60, while the benchmark Sensex experienced a slight decline of 0.2% during the same session.
