Ashok Leyland Ltd Quarterly Results Q3 FY 25 stock analysis

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Sector Outlook: Neutral

Estimates beat at all fronts; Growth delivered despite industrial headwinds

Ashok Leyland Ltd. (ALL) reported a standalone revenue of Rs. 94,787 million, growing 2.2% year-on-year (YoY) and 8.1% quarter-on-quarter (QoQ), driven mainly by strong truck and bus sales along with higher exports. Gross profit rose by 5.0% YoY and 7.0% QoQ to Rs. 27,044 million, with a margin of 28.5%, helped by lower inventory costs and stable raw material prices. EBITDA increased by 8.8% YoY and 19.1% QoQ to Rs. 12,114 million, with margins improving to 12.8% due to better pricing and cost management. Net profit jumped 31.3% YoY to Rs. 7,617 million but remained flat compared to the previous quarter due to a one-time gain from a subsidiary investment. Vehicle sales were mixed, with total units at 46,404 (down 1.4% YoY but up 1.7% QoQ). Domestic demand was weak, with 42,253 units sold (down 3.8% YoY / down 0.1% QoQ), while exports grew significantly to 4,151 units (up 32.7% YoY / up 25.4% QoQ). Truck and bus sales increased YoY, but light commercial vehicles (LCVs) declined both YoY and QoQ.

Key Concall Highlights

Business Highlights:

Domestic light commercial vehicle (LCV) sales dropped 9% YoY in Q3FY25.
Ashok Leyland aims to increase its LCV market share to 20% in the short term and 25% in the medium term.
The company maintains over 30% market share in the domestic medium & heavy commercial vehicle (MHCV) market, with 30.4% share for 9MFY25.
Exports grew by 19% YoY, and the company has a strong export order book for Q4FY25.
Non-commercial vehicle (non-CV) businesses also grew:
- Engine sales rose by 3.5% YoY
- Spare parts revenue increased by 14% YoY
Ashok Leyland had Rs. 958 crore cash in hand at the end of Q3FY25, a big improvement from Rs. 1,747 crore net debt last year.
Capital expenditure (CapEx) for the quarter was Rs. 179 crore, bringing the total for the year to Rs. 486 crore.

Demand Trends:

The MHCV industry bounced back in Q3FY25 after a slowdown in Q2FY25.
The recovery was driven by higher festive season demand and increased government spending.
Domestic MHCV sales grew 10% QoQ but were 1% lower YoY.
This was still much better than the 12% YoY decline in Q2FY25.
Q4FY25 outlook is positive, with January showing strong industry growth.

Other Updates:

The reverse merger of Hinduja Leyland Finance with NDL Ventures is progressing well and should be completed by Q1FY26.
Switch Mobility launched the Switch EiV 12, a new low-floor electric bus for India.
The company’s electric light commercial vehicles (eLCVs) are gaining popularity, with production exceeding 100 units per month.
OHM, the company’s electric mobility (E-MaaS) subsidiary, operates 600+ buses with 98% fleet availability.
The Ashok Leyland Board approved:
- Rs. 200 crore investment in Hinduja Leyland Finance.
- Rs. 500 crore investment in Optare (Switch’s holding company) to fund future growth.
Ashok Leyland launched SAATHI, its first mini truck, at the Bharat Global Mobility Expo in New Delhi.

Valuation and Outlook

Ashok Leyland had a strong quarter, performing better than expected and showing improved profits. Despite slow demand, revenue grew well, and profit margins increased due to cost-cutting, better product selection, and premium pricing. The rise in exports aligned with the company’s plans to expand in regions like the GCC, SAARC, and Africa. Looking ahead, the demand outlook is positive but slightly cautious. The MHCV segment is improving as fleet usage increases and old vehicles are replaced, though demand depends on how quickly infrastructure projects move forward. Bus sales should remain steady, while LCV demand is expected to recover gradually. The company remains optimistic, with exports set to grow further as it focuses on new markets and specialized products. The launch of the SAATHI mini truck will help increase its LCV market share, and investments in Switch Mobility (EV business) will drive future growth. Switch Mobility has strong orders for 1,800+ buses, including exports, and is developing new EV products to strengthen its market position.