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Informist, Friday, Aug. 14, 2026

 

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--Ashok Leyland: War affected sales in West Asia mkts 
--CONTEXT: Comments by Ashok Leyland mgmt in post-earnings analyst call 
--Ashok Leyland: Available inventory helped offset input cost pressures 
--Ashok Leyland: Hiked CV prices by 1.25% Q1, helped offset cost pressures 
--Ashok Leyland: Expect respite from commodity cost pressures in Q3, Q4 
--Ashok Leyland: Considering another price hike before Q2 ends 
--Ashok Leyland: Cost pressure on margin Q2 will be higher than in Q1 
--Ashok Leyland: Focusing on high horsepower units which give better margin 
--Ashok Leyland: CV industry expected to continue growth momentum till Oct 
--Ashok Leyland: See headroom for growth in light CV segment 
--Ashok Leyland: Situation at UAE unit stabilising; output rising gradually 
 

 

By Ashutosh Pati and Anand Chandrasekhar

 

MUMBAI – With rising input costs from the war in West Asia pressuring margins, Ashok Leyland is shifting focus to more profitable, higher-horsepower segments. The company increased product prices in July and expects one more hike before the end of the September quarter, a top official said on a post-earnings conference call with analysts and investors.

 

"... Taurus and Hippo that we had launched are gaining a lot of momentum. And these are high-horsepower, heavy-duty trucks where the margin equation is better... we had lost some margin and market share in quarter one on the multi-axle trucks. But now with air suspension trucks, we hope that we will more than recover that," the official said.

 

The company expects cost pressures from rising commodity prices to be higher this quarter than in June. The impact will be felt in the current quarter, but it will not be significant, as the company has raised prices and is also accelerating cost-saving measures. It expects these pressures to recede in the December and March quarters.

 

Ashok Leyland increased prices of commercial vehicles by 1.20-1.25% in the June quarter, the official said, adding that the cumulative price hikes for 2026-27 (Apr-Mar) are now at 2-2.5% for medium and heavy commercial vehicles and over 3.5% for light commercial vehicles. The company's earnings before interest, tax, depreciation, and amortisation for the quarter were unchanged on-year at INR 9.70 billion, but EBITDA margin contracted by 100 basis points to 10.1%.  

 

The company partially offset the cost increases in the June quarter by maintaining considerable open inventory. "So we could use about one-fifth to one-fourth of the total requirements in this quarter from the opening (inventory) thing. That has prevented us from charging the commodity cost increases that have happened during the quarter," the official said. He said around four-fifths of the total costs incurred during the quarter flowed into its earnings. "When these vehicles get sold subsequently from the opening inventory, we'll get the benefit," he added.

 

Ashok Leyland sees "huge" headroom for light commercial vehicles and already has products in its pipeline. "We want to come up with products across the LCV range because we know that we are participating only in 50% of the industry," the official said. Asked how the company is progressing beyond its core business and how its product mix will evolve in the coming years, the official said its priority is to build enough business outside M&HCV to fully cover fixed costs.

 

The company expects better volume growth in M&HCV for the September quarter than in the June quarter, as demand momentum bounced back in June and has continued in July and August as well. The official said the growth momentum in CVs is expected to continue till October. Ashok Leyland plans to increase its capital expenditure over the next two years and will share the figures once the plan is ready.

 

The company lost market share in heavy buses during the June quarter after deciding not to participate in unprofitable tenders. "So now we are very clear on how we want to approach this bus business. On the heavy duty side, if there is an unprofitable tender, we are very clear. We will not take it even if we lose a little bit of market share temporarily," the official said.

 

EXPORT MARKETS

The war in West Asia has affected Ashok Leyland's sales in the region. It had a "tough time" with exports in the June quarter but believes the worst is already behind. Its assembly unit in the United Arab Emirates had to almost stop working in April and for a short period in May due to the war. However, production has resumed and is improving gradually, the official said. It produced 600 units in July and expects to produce 700 units this month. This is expected to peak at 800 units in September.

 

"... we had both kinds of problems, the labour problem and also the material problem, basically local components that we procured... from countries around... the factory has a capacity of only 600, but we were running it at 800 with some temporary arrangements. So we are hoping to get it back to 800," the official said.

 

The company is also expediting its new plant in Saudi Arabia as demand momentum in the region remains "very strong" despite the uncertainties. "So originally, the plan was to have it up and running in about 18 to 24 months. So we are trying to see how much we can accelerate," the official said.

 

Ashok Leyland reported a net profit of INR 6.09 billion for the June quarter, up around 3% on year. Its revenue for the quarter rose over 10% on year to INR 96.34 billion. The company declared June quarter results during market hours Friday. Ashok Leyland's shares ended at INR 171.64 on the National Stock Exchange, down 2.6% from the previous close.  End

 

Edited by Saji George Titus

 

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