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marching ahead!

Ashok Leyland (AL) reported solid topline growth of 9% qoq while posting a growth of 63% yoy on a low base. The base quarter last year was low on chip shortage issue. Volumes during the quarter slightly moved down by 3% qoq, while grew by 29% yoy. Realizations grew handsomely by 27% yoy and 13% qoq which contributed strongly to the qoq topline growth. This growth came on the back of robust product mix and price hikes taken during the quarter. The company gained significant market share yoy at 32.6% from 25.3% and 30 bps from 32.3% qoq. EBITDA margins expanded to 8.8% up by 230 bps sequentially and 480 bps yoy. This was due to decreased commodity costs (76.3% of sales v/s 78% qoq and 77.9% yoy) and lower other expenses (8.8% v/s 9.1% of sales qoq) led by lower marketing costs and reduction in discounts. Other income was up qoq at ?316 mn, while tax rate was at 36.7% as the company is still going with the old tax regime. PAT adjusted for one time gain of ?69.4 mn came in at ?3.54 bn up from ?1.91 bn qoq.

New launches and strength in the underlying sectors to drive volumes in FY24 as well

We are witnessing a superb performance by the CV sector, especially on its heavier side due to economic recovery, absence of pandemic and underlying drivers such as infrastructure & mining, construction and demand from big fleet operators. As the market has completely opened up, we see the truck numbers moving up further. We saw demand for tractor trailers, tippers, haulage and MAVs moving up strongly. The demand for buses is also high with a growth of 132% yoy with opening of schools, colleges and offices and EV versions of buses getting an encouraging response. This along with various partnerships and opening of dealerships across India has led to higher market share which rose both yoy and qoq at 32.6%. The deeper penetration has led to higher sales in North, East and Central parts of the country as well where AL is traditionally less present. AL has also launched various model variants in most of its segments across HPs. The company recently launched the e-Comet Star ICV CNG range to address the gap in its portfolio (CNG mix in ICV segment had reached ~40% in FY2022 from 13% in FY2019). The company launched two tractor trailers (4225 and 4825 models) couple of quarters ago, All these models are fetching a very strong demand especially the Avatar range of trucks

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