Ashok Leyland Limited

During Q1 FY25, Ashok Leyland successfully retained its market share in the commercial vehicle sector at approximately 31%. This stability was achieved despite a challenging environment, as the Medium and Heavy Commercial Vehicle (MHCV) industry experienced a 10% growth. Additionally, Ashok Leyland's Light Commercial Vehicle (LCV) volumes increased by 4%, surpassing the overall industry performance, which remained relatively flat. This strategic positioning highlights Ashok Leyland's resilience and adaptability in a competitive market.

Ashok Leyland is actively addressing sustainability through its commitment to achieving Net Zero by 2048 and Carbon Neutrality by 2030. The company is focusing on developing Centers of Excellence for battery packs and electric vehicles, which aligns with its decarbonization agenda. Additionally, Ashok Leyland is advancing its battery electric vehicle and alternate fuel vehicle initiatives across both Medium and Heavy Commercial Vehicles (MHCV) and Light Commercial Vehicles (LCV). Their ESG initiatives have been recognized as best-in-class, reflecting a low-risk profile. By integrating sustainability into operations, product development, and supply chain management, Ashok Leyland aims to make significant strides in environmental responsibility while enhancing customer experience.

Ashok Leyland plans to launch a total of six new products in the light commercial vehicle (LCV) segment during FY25. Two of these products have already been introduced in Q1, while four additional launches are scheduled for the upcoming quarters. Although the company is exploring entry into the sub-2-ton LCV category, this initiative is considered a medium-term project and will not be launched within this fiscal year. This strategic focus on expanding their LCV offerings aims to capture a larger share of the market, which currently sees Ashok Leyland covering only 50% of the addressable market.

In Ashok Leyland's Q1 FY25 earnings conference call held on July 26, 2024, the company reported record financial highlights. Revenue reached an all-time high of Rs. 8,586 crores, reflecting a 5% year-on-year growth. The profit after tax (PAT) stood at Rs. 526 crores, marking the highest for Q1. Key metrics included an EBITDA of Rs. 911 crores, up 11%, and a profit before tax (PBT) of Rs. 701 crores, up 13%. Total commercial vehicle volumes hit 43,893 units, a 6% increase, while light commercial vehicle (LCV) volumes rose to 15,345 units

The aging fleet of commercial vehicles in India is primarily attributed to several factors, including prolonged vehicle lifespans, economic fluctuations, and the impact of the COVID-19 pandemic, which slowed replacement demand. Currently, the average age of commercial vehicles is around 10 to 11 years, significantly higher than the historical average of 7 to 8 years. This trend indicates a substantial potential for replacement demand as older vehicles become less efficient and more costly to maintain. Industry experts anticipate that this demand will likely unlock in the next two to three years, driven by favorable macroeconomic conditions and potential policy changes aimed at modernizing the fleet.

During the Q1 FY25 earnings call, Ashok Leyland highlighted significant advancements in its electric vehicle (EV) market performance. The company successfully launched two electric light commercial vehicles (eLCVs), the IeV 4 and IeV 3, which are designed to transform last-mile mobility in India. These vehicles received an excellent customer response, indicating strong market interest. Additionally, Ashok Leyland is actively developing Centers of Excellence for battery packs and electric drive units, reinforcing its commitment to sustainability and innovation in the EV sector. This strategic focus aligns with their broader goal of achieving Net Zero by 2048, showcasing their dedication to leading in the electric vehicle market.