Ashok Leyland maintains market grip amid industry slowdown

Ashok Leyland, the Indian flagship of the Hinduja Group reported a mixed results for the first half of fiscal year 2025. The results were tempered by a deceleration in overall industry volumes. However, the company continues to hold a sizeable market share.

According to an investor presentation by the company, sales of the overall industry stood marginally lower in the first half of the current financal year.

Ashok Leyland remains optimistic about industry prospects for the second half, on expectaions of increase in government and private capex, and good monsoon.

The industry's  medium and heavy commercial vehicle (MHCV) sales volume in H1FY25 was 1,67,985 units, down from 1,71,743 units in H1FY24, reflecting a decline of 2%.

Ashok Leyland, on the other hand registered 51,899 units in H1FY25 versus 54,233 units registered in H1FY24, a 4% drop. Despite the dip in volumes, the company's market share stood at 30.9% in the latest quarter (Q2), while it was 30.7% in Q1FY25.

Ashok Leyland's strong position in the bus segment, where it holds a dominant 34% market share, has been a significant driver of growth. 

Dheeraj Hinduja, Executive Chairman, Ashok Leyland, said, "We are hopeful of this recovery happening in the second half of the current financial year. But one thing which you should look at is that our market share continues to be about 31%. As for the domestic sales volume for the first half, we know that in the first quarter, we witnessed growth. And in the second quarter, there has been a drop. So, net-to-net the industry's sales volume is at about the same level. And Ashok Leyland is also at about the same level as last year." 

"The bus industry had been growing very significantly in the last quarter as well. We saw significant growth. I think, moving forward, we will continue to see healthy growth in the bus industry," he added. 

In the small commercial vehicle (SCV) segment, industry sales volumes dropped by 8% to 80,227 units in Q2FY25 vis-a-vis 87,275 units in Q2FY24. Ashok Leyland's sales volumes saw a 3% drop to 15,902 units in Q2FY25 as against 16,458 units in Q2FY24, translating to a market share of 19.8%, a 90 bps increase year-on-year.

Ashok Leyland currently covers around  50% of the LCV segment product portfolio and aims to cover up to 80% in times to come. It plans to launch six products in the LCV segment in FY25.

Shenu Agarwal, MD & CEO, Ashok Leyland, said, “Our focus on profitability continues. We are happy that we could improve our profitability by focusing on premiumization of our products, addressing cost compression opportunities, and continuously elevating our standards of customer service. Our PAT in Q2FY25 is an all-time high. Our EBITDA margins have improved both sequentially and on YoY basis, making this the seventh consecutive quarter of double-digit EBITDA. We are well on track to achieve mid-teen EBITDA in the medium term.”

In Q2FY25, Ashok Leyland bagged a large repeat order of 180 units of Boss 19T BEV and AVTR 55T TT BEV. Deliveries for the initial order have started.  Ashok Leyland is the only OEM in India to manufacture 12m ultra low floor diesel buses. The company has started deliveries to MTC, Tamil Nadu. Further, with the launch of Bada Dost i5, the company ventured into the 3.5-4T space, expanding the LCV product portfolio.