Hinduja Group’s heavy commercial vehicle manufacturer, Ashok Leyland on Thursday reported a rise of 101% y-o-y growth in its net profit to R290.78 crore during the April-June quarter on the back of substantial growth in volumes in the medium and heavy vehicle segment.
According to data available with Bloomberg, this is the best performance of the company since the fourth quarter of FY11 when it reported a net profit of R298 crore on the back of a good performance in the heavy vehicles segment.
During the quarter under review, sales of trucks and buses increased by 12% y-o-y to 24,027 units which led to an increase of 10.6% y-o-y increase in revenues to R4175.79 crore.
At an operating (Ebitda) level, ALL reported an increase of 21.34% y-o-y to R476.27 crore.
Vinod K Dasari, managing director, Ashok Leyland said, “We recorded a domestic volume growth of 18.5% as against the industry growth of 14.5%. I am happy to note that we continue to outperform the industry. Our initiatives on network development, operational efficiency, talent development, and new products continue.”
The turnaround in the fortunes of the company started from the third quarter of FY14 when the demand for trucks and buses started to revive on the back of increased activity in the manufacturing, infrastructure and increased availability of cargo from the agriculture sector.
Due to the economic slowdown which adversely impacted volumes in the heavy vehicles segment, Ashok Leyland reported a loss of R164 crore in FY14 but recovered in FY15 with a profit of R133.89 crore.
The country’s second largest heavy vehicle manufacturer reported its highest ever net profit of R1070.68 crore in FY 16.
Due to the improved financials, Ashok Leyland’s finance cost in the first quarter of the fiscal halved to R33.82 crore from R70.20 crore in the year ago period.
Volumes in the heavy vehicles segment moderated in June as dealers in north India stopped buying vehicles because of the low freight rates and rise in diesel prices while in the southern part the volumes were hit by assembly elections in Tamil Nadu, and non registration of BS III commercial vehicles in states like Telengana and Andhra Pradesh.
Analysts though expect substantial rise in volumes as fleet owners will buy vehicles before the implementation of BS IV by April 2017 which will increase the price of the vehicles.