Ashok Leyland leverages record M&HCV volumes to boost its FY24 topline

Ashok Leyland has improved its CV market share from 28.2 percent last year to 33 percent.

The booming mining and steel sectors, execution of infrastructure projects, and the improving industrial outlook continue to  drive demand for Medium and Heavy Commercial Vehicles (M&HCV) for Ashok Leyland Limited (ALL). During the first nine months of this financial year (April-December 2023), the Chennai-based CV maker sold 87,736 units of medium-and heavy- duty trucks (7 percent up YOY).

While giving an overview of its financial results, the homegrown CV maker stated that the demand trajectory remains good for the rest of the period, albeit higher than the fourth quarter base last year.  The Hinduja flagship company had also indicated that it would remain at above 30 percent market share in the M&HCV space and move towards a 35 percent market share going forward.

As Dheeraj Hinduja , Executive Chairman of ALL puts it, “I'm confident that with the strength of the current and new products backed by continuous expansion of sales network, we will continue to grow in both  the M&HCV and LCV (segments) Despite challenging international market conditions, we have managed to stay marginally ahead of the volumes clocked last year.”

While stating that its growth in the M&HCV space is in line with industry growth, he also indicated that the company  will drive growth in non-MHCV businesses covering the Aftermarket, Defense and Power Solutions businesses.

The BSE-listed company asserted that it has posted the “highest record performance” for nine months, selling 1,38,416 units of Commercial vehicles across segments. It has grown by 65 per cent in the bus segment, which is almost twice the industry growth.

Thanks to a high vehicle offtake, the company clocked a revenue of Rs 27,100 crore for a nine month period of April-December 2023, with the highest EBITDA of Rs 3,014 crore and the highest PAT of Rs 1,718 crore.

Shenu Aggarwal, CEO of Ashok Leyland revealed that in the M&HCV space, on a  nine month basis the industry has grown by 9 percent and Ashok Leyland by 7 percent.

“While the growth has been across all segments, M&HCVs have been growing slightly better this year. Within the M&HCV segment, the bus market is moving very well and saw the highest growth so far in this year. The second one is the tractor-trailer segment , which is also showing very good signs of growth. The third one is the tipper segment. These sub-segments are growing faster than the rest of the segments,” Agarwal told Moneycontrol.

He revealed that most of the sectors such as steel mining, roads, etc., are doing well, e-commerce and rural ones are "slightly subdued”.

It may be recalled that India's eight core sectors posted a growth of 3.8 percent in December, according to data released by the Ministry of Commerce and Industry on January 31.

Ashok Leyland has also improved its market share from 28.2 per cent last year to 33 per cent in the overall CV market.

Bottomline skyrockets

Despite growing just 2 percent in its topline at Rs 9,273 crore during the third quarter of FY24, Ashok Leyland witnessed a 60 percent increase in its bottomline at Rs 580 crore. The company attributed a combination of factors such as good volumes, better price realisation and higher cost savings to boost its bottomline during Q3 FY24.

When asked to cite reasons behind the growth in profits, Aggarwal revealed, “We have been able to maintain a very strong price discipline. We are not going to sacrifice margins because of (gaining ) market share.  Secondly, we had (made) a humongous effort on the cost savings like last year. The third factor is, the commodity prices has also softened a little bit, which helped improve our margin.”

Meanwhile, Ashok Leyland is gearing up to widen its presence in the EV segment.  It has recently handed over the first set of keys of the 14-tonne Boss Electric Trucks to Billion E-Mobility at the Bharat Mobility Global Expo in New Delhi.