Ashok Leyland’s revenues increase 3.5 times to `2,951-cr in Q1.

Ashok Leyland, flagship of the Hinduja Group,reported revenue of `29.5-bnas against `651-cr.in Q1 FY’21. On a Q-o-Q basis, it is down 58 per cent, driven by volume declineof 59 per cent Q-o-Q, and realization growth of 3.1 per cent. The company hasreported domestic MHCV volume growth at 1,041 per cent,which is close to twice the industry growth of 562 per cent over the sameperiod last year.

The company’s domestic LCV volumes for Q1 FY’22,at 8,690 nos., is higher than Q1 FY’21 by 224 per cent (2,686 nos.). Export volumes(MHCV and LCV) for Q1 FY’22 at 1,437 nos. is higher than Q1 FY’21 by 254 percent (405 nos.).

Ashok Leyland's operating performance in1QFY22 was disrupted by pandemic induced lockdowns and restrictions. AL's salesvolume declined 59 per cent Q-o-Q in 1QFY22 and the company reported EBITDAloss.

Market analysts say that QFY22 was a challengingquarter for the freight industry as well as truck manufacturers. However, theyexpect M&HCV demand to recover in 2HFY22E and grow strongly over the nexttwo years, led by revival in economic activities and higher capital investments.

AL reported a net loss of `282-cr. for Q1 FY’22, vis-a-vis a netloss of `389-crin Q1 FY’21. Debt Equity at 0.62 times is the same as Q1 of last year.

The company saw strong demand for the AVTR range– India’s first modular truck platform, and this demand is expected to furtherimprove, mirroring the increased economic activity expected.

In the LCV segment, the recently launched BadaDost has seen good acceptance in the market and the company is ramping upproduction in line with market demand.

Going forward, last-mile connectivity demandpropelled by e-commerce is likely to continue supporting ICV and LCV truckvolumes. Other businesses like Defence, Power Solutions and After-marketcontinue to contribute strongly to the top line of the Company.

Analysts expect LCV (cargo) volumes tocontinue to scale-up with growth in consumption, e-commerce and agri-industry. Inaddition to the cyclical upturn in demand, analysts believe that AL management'sefforts to reduce the cyclicality of the business by enhancing its LCV/ICVproduct portfolio, increase in exports through expansion into new markets onthe back of a complete LHD portfolio and initiatives to capture greater shareof consumables over vehicle life cycle will strengthen the business over themedium-term.

Capital expenditure in FY21 was `6.2-bn, downfrom `12.9-bn in FY20. The management expects capex of `7.5-bn in FY22E and potential investment of `2.0-`2.5-bn in subsidiaries.

Given the growing importance of EVs and green mobility, thecompany has created a dedicated EV entity called Switch mobility, which bringstogether capabilities from Optare UK, and Ashok Leyland. Dana Inc., the globalleader in drivetrain and e-propulsion systems, will make a strategic minorityinvestment of US$18-mn, representing 1.0 per cent stake in Switch Mobility.