Ashok Leyland Q1 profit at Rs 68 cr Q1 on strong volumes vs year-ago loss

The company is planning to invest Rs 750 crore in each of the next two years and is in the final round of talks to raise funds for its EV arm Switch Mobility

Ashok Leyland, the flagship company of the Hinduja Group, posted a net profit of Rs 68 crore during the first quarter of financial year 2022-23, pushed by strong volume growth. The firm had incurred a loss of Rs 282 crore during the April-June quarter of the previous financial year,  

The company said it is planning to invest Rs 750 crore in each of the next two years, and is in the final round of talks to raise funds for its electric vehicle arm, Switch Mobility. Ashok Leyland’s chief financial officer Gopal Mahadevan told Business Standard that a deal is a few weeks away and the company is in talks with several private equity and sovereign wealth funds for for Switch Mobility's funding programme. The initial plan was to raise about $200 million for Switch Mobility's expansion in India, the UK and Spain. Ashok Leyland is also looking to invest around Rs 2,000 crore under the Production Linked Incentive (PLI) scheme.

Ashok Leyland’s revenue from operations rose 145 per cent during the quarter under review, to Rs 7,223 crore, from Rs 2,951 crore in Q1FY22. EBITDA for Q1FY23 was Rs 320 crore against a loss of Rs 140 crore in the previous year. During the quarter, net debt to equity was at 0.3 times (0.6x in Q1FY22).

The company's domestic medium and heavy commercial vehicle (M&HCV) volume grew 189 per cent and market share rose from 27 per cent to 30 per cent. Its share in the truck market stood at 31.1 per cent for the first quarter of the current financial year, versus 26.2 per cent during the same period last year.

“The industry has seen strong volume growth in Q1FY23, and we expect this trend to continue. The team is focused on market performance while reining in costs this quarter. Our digital-first approach is helping Ashok Leyland customers increase their business efficiency and we are continuing to expand our offerings. We are pleased that we have continued to grow our market share,” said Dheeraj Hinduja, Executive Chairman, Ashok Leyland.

The company’s domestic LCV (light commercial vehicle) volume in Q1 of FY23 was 14,384 units, up 66 per cent over 8,690 units in Q1FY22. Export volume (MHCV & LCV) for the quarter under review was 2,527 units, up 76 per cent over the same period last year (1,437 units).

“Our bottom line has been improving with expansion in revenues and efficient cost management. The softening of commodity prices, particularly steel, should impact our margins positively," Mahadevan said. The company’s total expenses during the quarter rose by 114 per cent and Mahadevan said steel prices, the major reason for this rise in Q1, are likely to come down during the second quarter.

“Through our electric vehicle subsidiary, Switch Mobility, we are taking strategic steps to move towards net zero-carbon mobility. The EV market is expanding fast and we are ready to participate in this growth.  We are committed to achieve our sustainability agenda with a clear road map,” Hinduja added.