Partner With Us NRI

Open Free Trading Account Online with ICICIDIRECT

Incur '0' Brokerage upto ₹500


Steady performance; gross margin expansion surprises positively - Ashok Leyland Q2 Review

ICICIdirect Research 11 Nov 2022 DISCLAIMER

What's Buzzing 

Ashok Leyland (ALL) reported a steady performance in Q2FY23. Sequential improvement in EBITDA margins was a key takeaway for the quarter. It was primarily driven by healthy gross margin expansion amid limited operating leverage benefits. 


Standalone total operating income for Q2FY23 came in at Rs 8,266 crore (up 14.4% QoQ). ASPs for the quarter came in at Rs 18.2 lakh/unit, flat QoQ amid a decline in share of M&HCV volumes in the total sales volume mix (~61.5% in Q2FY23 vs. ~63% in Q1FY23). EBITDA for the quarter came in at Rs 537 crore with corresponding margins at 6.5%, up 210 bps QoQ. Gross margin expanded ~131 bps QoQ and was further supported by lower other expense, which declined 96 bps QoQ. PAT for the quarter was at Rs 199 crore. 

Our Perspective 

Ashok Leyland (ALL) is a pure play CV manufacturer domestically, with H1FY23 market share pegged at 17.5%. The company is present in M&HCV trucks and buses as well as LCV goods segments with Q2FY23 product mix as: LCV goods 39%, trucks 53% and buses 8% and total sales volume for Q2FY23 are placed at 45,295 lakh units, up 14.2% QoQ. With a cyclical recovery under way in the domestic commercial vehicle space amid greater infrastructure spend by the government as well as revival in private capex cycle, the company is well positioned for robust growth over FY23E-24E. The company also has a formidable presence in the E-Mobility space though Switch Mobility and could be one of the key beneficiaries, wining domestic tenders for electric buses floated by CESL. Key monitorables, going forward, for the company include sustenance of healthy operating margin trajectory, ramp up in its EV sales volume and volume growth at its base business given the pick-up in economic activity.

Download App

Download Our App

Play Store App Store
market app