Worst behind, industry to start looking up: Ashok Leyland

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26 Aug, 2025 12:21

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Ashok Leyland reported a net loss of Rs 167 crore for the December quarter—the third successive quarter of losses—as the ongoing economic slowdown continued to hurt demand for commercial vehicles.With this, the company has now reported a net loss of Rs 334 crore on sales of Rs 6715 crore for the 9-month period till December.In a conference call with analysts, the management said the industry may have bottomed out and things were expected to start looking up from this quarter.The company’s market share in the bus segment fell to 34.9 percent from 43.4 percent, and the management attributed to it some key clients deferring their orders.In the meantime, the management is trying to strengthen the balance sheet and improve profitability.The company generated Rs 230 crore of cash flow in the December quarter and reduced Rs 485 crore of working capital. Since August, debt has reduced by Rs 750 crore and working capital by Rs 800 crore. Also, number of receivable days have dropped by 45-50 percent, and so have inventory levels from 7,500 to 4,100 during the quarter.

Also Read: CV space headed for disaster if no revival in next 6 monthsAs promised, the company sold non-core assets, and mopped up Rs 100 crore by selling IndusInd Bank shares.Ashok Leyland now is looking to restrict capital expenditure to Rs 500-700 crore for this financial year.The company's stock has fallen over 34 percent over the last year, compared to a 9 percent rise in the BSE Auto Index during the same period.Brokerage house Ambit feels Ashok Leyland is a turnaround stock."The double whammy of the debt burden and an economic downturn has left the company’s financials in poor shape. However, on the positive side, we like the franchise for its competitive advantages as well as cash generating Nature," said the Ambit note."We believe capex (including product development spends) would moderate going forward, as current capacity levels leave significant headroom to cater to volumes of future years. With the help of an industry demand recovery, we believe AL can have significantly better prospects from FY15 onwards,” the note said.