New Delhi: Lower volume and higher expense on raw materials singed profits by one-third at Ashok Leyland Ltd, the country’s second largest commercial vehicle maker by sales.
In three months to June, company’s net profit declined to Rs 86.3 crore as against Rs 122.6 crores for the corresponding quarter in the previous year, the it said in a statement. The earnings were broadly inline with the Street estimates. A Mint poll of five brokerages on 13 July had expected company’s net to decline by 36%.
Net sales during the quarter increased 6.28 % to Rs 2,495.5 crore, as against Rs 2,347.97 crore in the year- ago period.
“The rise in cost of ownership due to spiralling input costs, the rise in fuel prices, hardening interest rates and a fall in freight availability all contributed to this moderation,” said Vinod K Dasari, managing director at Ashok Leyland in a statement. However, Dasari is cautiously optimistic of the quarters ahead as the fundamentals remain strong.
The company expects to rake in volumes from the launch of Dost, the first light commercial vehicle from the Ashok Leyland-Nissan stable and the construction equipment products in association with John Deere & Co.
Ashok Leyland’s raw material costs and expenditure incurred on work-in-progress increased to Rs 1,960.63 crore from Rs 1,728.32 crore in the same quarter a year ago. This was even as the volumes dipped to 19277 units from 21,400 units in the corresponding period last year.
Surjit Arora, analyst at brokerage Prabhudas Lilladhar Pvt Ltd said company’s revenue was ahead of the estimates as the surprise came on back of realisation on vehicle sales that shot up 18% year on year. Arora expects the sales of medium and heavy commercial vehicles for the industry to remain muted in the current quarter as fleet operators postpone buying new vehicles owing to the monsoons.
Ashok Leyland’s share closed at Rs 50.70 a piece, down 2.69% at the benchmark Bombay Stock Exchange. The sensex closed at 18,653 .87 points up 0.79%.