Ashok Leyland shares surge 4% as Q1 profit jumps 8 times

Shares of Ashok Leyland Friday jumped 4  per cent to hit a fresh record high in Friday's trade after the Hinduja group firm said its profit for the June quarter jumped  over 8 times. Ashok Leyland said its profit for the quarter stood at Rs 576 crore against Rs 68 crore in the same quarter last year. Revenue for the quarter jumped to Rs 8,189 crore against Rs 7,223 crore YoY. In the same period, Ashok Leyland's domestic MHCV volume grew 7 per cent and market share increased to 31.2 per cent from 30 per cent. The MHCV truck market share was at 31.7 per cent for the June quarter against 31.1 per cent in the same period last, Ashok Leyland said.

Following the development, the stock climbed 4.01 per cent to hit a high of Rs 182.70 on BSE.

"Overall, Ashok Leyland's were a strong set of numbers on both revenue and margins, beating our and Street’s consensus estimates. The CV industry has been aiming for profitable growth since the 2HFY23, when Tata Motors started reducing discounts offered. This has led to improvement in margins across CV OEMs. Ashok Leyland was targeting to reach double digit margins in FY24, which it has achieved in 1QFY24 itself, which gives us confidence in its medium term margin targets of reaching mid-teen," said Himanshu Singh,  Research Analyst at Prabhudas Lilladher.

The stock current trades at 19.5 times FY25 EPS. Ashok Leyland has noted that demand should improve from the September quarter onwards, as June quarter volume performance was impacted due to pre-buying in March quarter, ahead of transition to BS VI OBD 2 norms.

Ashok Leyland said it continued to see strong demand for the modular AVTR range of trucks. The efforts on network expansion also helped the uptick in revenue and market share. In the LCV segment, volumes grew on the back of good market acceptance of 'Bada Dost' range, it said adding that the Power Solutions and aftermarket businesses continued to contribute strongly to the top line of the company.

Executive Chairman Dheeraj Hinduja said: "With the industry maintaining the growth in Q1, we have been able to post excellent results with focused market performance while reining in costs. We are pleased that we have continued to grow our market share in Q1. We are concurrently intensifying our efforts in international expansion. Through our Electric Vehicle subsidiary, Switch Mobility, we are actively moving towards net zero carbon mobility. The EV market is growing gradually, and we are geared to participating in this growth with a clear road map."

MD & CEO Shenu Agarwal added: "With expansion in revenues and efficient cost the management we have seen our bottom line improving substantially. While we continue to expand market penetration on the back of efficient products and expanding the network, we shall remain acutely focused on achieving and sustaining double-digit profitability. This is important for us as we focus on improving our resilience and investing in technologies of the future."

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