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Revenue for the quarter decreased by 9.0% YoY to Rs. 87.69bn (vs est. of Rs 90.27bn) due
to 8.5% YoY decrease in volume and 0.6% YoY decrease in ASP. Gross margin for the
quarter expanded by 235bps YoY on account of favorable mix. EBITDA margin came at
11.6% (+40bps YoY/+101bps QoQ). EBIDTA in Q2 down to Rs.10.17bn from Rs.10.80 (-5.8%
YoY/+11.7% QoQ), and EBIDTA/Vehicle grew by 2.9% YoY to Rs.2.23lakh vs Rs.2.17lakh in
Q2FY24. RPAT for the quarter jumped to Rs.7.70bn vs est. of Rs.5.82bn.

* For Q2 FY25, Ashok Leyland reported a resilient performance despite a 12% YoY drop in
the MHCV industry volume due to seasonal factors. Domestic MHCV truck volume
decreased by 18%, while MHCV bus volume rose by 8%, totaling 25,685 units. The
company’s Q2 MHCV market share grew to 31.2%, and it maintained a strong 35% share
in the bus segment. LCV volumes were steady, and exports grew by 14% YoY. Revenue
dipped by 9% to INR 8,769 crore, while EBITDA margin improved to 11.6%, reflecting cost
control and higher price realization.

* Notably, material costs decreased to 71.2% of revenue, supported by lower steel prices
and cost-saving initiatives. Cash flow improved, with net debt reduced to INR 501 crore
and a low debt-to-equity ratio of 0.05. The company’s credit rating was upgraded to AA+
with a stable outlook. Progress was made in EVs, with a major order for 180 electric trucks
and a strengthened EV service network. Subsidiaries Switch and Ohm secured significant
orders and expect EBITDA breakeven this year. Ashok Leyland remains on track to achieve
its medium-term goals of mid-teen EBITDA, 35% MHCV market share, and leadership in
alternative fuel vehicles.

* View and Valuation : Ashok Leyland is set to benefit from new EV, multi-axle, and haulage
products, expanded domestic and global networks, and government infrastructure
spending. Q2 FY25 saw improved EBITDA margins (11.6%) despite revenue challenges,
reduced debt, and a growing market share. Defense segment growth further support a
positive outlook. Further replacement demand is also expected to improve in FY25 as
vehicle ageing now stands around 10 years vs traditionally 7-8 years. We value the stock
based on 22xSep-FY27E EPS to arrive at target price of Rs.243 and recommend HOLD.

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