Ashok Leyland Q2 PAT up 34% on cost control measures, steel price dip

Despite strong profits, total income dipped by 2 per cent to Rs 11,262.84 crore during the quarter, compared to Rs 11,463.03 crore in Q2 FY24

Ashok Leyland, the Indian flagship of the Hinduja group, has posted a 34 per cent rise in its profit after tax (PAT) during the second quarter of the current financial year (Q2FY25) to Rs 705.64 crore compared to Q2FY24, due to its cost-control measures, benign steel prices, and reduced material costs.

 

A one-time exceptional item of Rs 117 crore, representing an increase in value in one of the invested companies, also added to the profit. During Q2FY24, net profit was seen at Rs 526.01 crore. The company said its electric vehicle (EV) subsidiary Switch Mobility is expected to achieve earnings before interest, taxes, depreciation and amortisation (Ebitda) breakeven during the current fiscal, driven by increasing demand and a healthy order book of 2,000 vehicles.

 

 

Despite good profits, its total income dipped by 2 per cent to Rs 11,262.84 during the quarter, compared to Rs 11,463.03 crore in Q2FY24. "This was due to a decline in medium and heavy commercial vehicle (MHCV) volume, because of excessive heatwave and rains in some parts of the country," said K M Balaji, chief financial officer (CFO), Ashok Leyland.

 

MHCV domestic sales volume was at 25,685 versus 29,947 in Q2FY24. Light commercial vehicle (LCV) volume was at 16,629 compared to 16,998 in Q2FY24. Export volume for the quarter stood at 3,310 units and was higher by 14 per cent.

 

Ashok Leyland’s domestic MHCV market share continues to be over 31 per cent and the company is looking to increase it to 35 per cent. The company maintained market leadership in the bus segment. The LCV domestic market share in the addressable segments has also gained in the first half of the current financial year (H1FY25).

 

Dheeraj Hinduja, executive chairman, Ashok Leyland, said: “The Indian economy is expected to do well in the second half, which would benefit our industry. We remain optimistic about industry prospects for H2 on the back of strong macroeconomic fundamentals, supported by resumption of government spending in capex and good monsoons."

 

"Our robust all-round performance in Q2 is backed by our technological and cost leadership. Internationally as well, we are intensifying our expansion strategy in our focus markets of SAARC, West Asia, Africa, and Asia, aimed at posting the best performance ever during this financial year. We continue to invest in new products with alternative fuels. Switch is doing well with an order book of nearly 2,000 buses,” Hinduja said.

 

Defence, power solutions and aftermarket businesses continue to perform well and are expected to post good growth in FY25. The company continued to expand its innovative product offerings in Q2 by launching new products in Tipper, Bus, Haulage, and LCV segments. The focus on expansion of distribution network also continued. The company board has recommended an interim dividend of Rs 2 per share on a face value of Rs 1.

 

Shenu Agarwal, managing director and chief executive officer (MD & CEO), Ashok Leyland, added: “Our focus on profitability continues. We are happy that we could improve our profitability by focusing on premiumisation of our products, addressing cost compression opportunities, and continuously elevating our standards of customer service. We are well on track to achieve mid-teen Ebitda in the medium term.”