Analyst Concall
Don't need to look at capacity expansion, says Ashok Leyland
This story was originally published at 20:38 IST on 14 August 2025
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--CONTEXT: Comments by Ashok Leyland's mgmt in post-earnings analyst concall
--Ashok Leyland: Reiterate mid-single digit growth guidance for MHCV FY26
--Ashok Leyland: Overall capacity utilisation around 70%
--Ashok Leyland: Expect heavy duty truck segment to do better post monsoon
--Ashok Leyland: Bullish on defence ops this year as well as next
By Shakshi Jain and Arya S. Biju
NEW DELHI/MUMBAI – Commercial vehicle manufacturer Ashok Leyland Ltd. Thursday said that the company has sufficient overall capacity for the next two to three years but continues to expand in select areas such as fully built buses and the defence segment. The company said presently overall capacity utilisation hovers around 70%.
"...We are seriously considering enhancing the capacity of fully built buses even more. We have capacity of about 950 buses per month right now, and we want to go to 1,650 buses a month, including Lucknow. So we are putting those efforts in to increase that capacity. But otherwise, overall, whether it is LCV (light commercial vehicle) or trucks, ICV (intermediate commercial vehicle) or heavy duty, you know, capacity-wise, we are fine," a top company executive said in a post-earnings analyst conference call.
In terms of financial performance, the company reiterated the mid-single digit growth guided for medium-heavy commercial vehicles in 2025-26 (Apr-Mar). In the defence segment, the company said it is confident of clocking double-digit revenue growth this fiscal. The automobile major is bullish on this segment for next financial year as well amid a strong order book of more than INR 10 billion.
"And we also have one tender, which is, the value of which is 2,000 crore plus (INR 20 billion-plus), of which we are awaiting the orders... I think going forward, actually, orders are not going to be a concern for us for at least next year, year and a half, because now we have to just execute these and get it out, get these orders out as soon as we can. So, we are pushing some capacity there...it doesn't require a mammoth capex, it just requires a little bit of a tweak here and there. But defence capacity, we are also increasing on a month-to-month basis," the company's management said.
The company also said it expects the heavy-duty truck category to perform better after the monsoon season. "...We are seeing a lot of offshoots in the heavy-duty segment, whether it is in the mining sector or construction or even like car carriers or other things. So, we are actually more optimistic this year in the second half, I mean, after August, September, about heavy duty than for the ICV sector," the company management said.
Providing a directional view on operating margins of the company, the management said Ashok Leyland does not sacrifice margins to gain market share. The company is instead focusing on premiumisation of products, service excellence, controlling costs, and expanding the non-commercial vehicle business, which is a high-margin segment.
Earlier in the day, Ashok Leyland reported a year-on-year net profit growth of 13% for the June quarter to INR 5.94 billion, while its revenue from operations in the three months rose just 1.5% on year INR 87.25 billion. Sequentially, the company's top line fell nearly 27% and its bottom line declined more than 52%.
The company's earnings before interest, tax, depreciation and amortisation for the quarter ended June rose 6.5% on year to INR 9.70 billion from INR 9.11 billion a year ago. Its operating margin expanded 52 basis points on year to 11.11%. "Our priority remains achieving mid-teen EBITDA margins in the medium term, while advancing our commitment to future-ready technologies," Shenu Agarwal, managing director and chief executive officer of Ashok Leyland, said in a press release.
Thursday, shares of the company closed at INR 121.96 on the National Stock Exchange, up almost 2% from the previous close. End
Edited by Deepshikha Bhardwaj
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