Revenue from operations during the quarter improved by 19.8% year-on-year to ₹4814 crore on the back of a 7% increase in vehicle sales
Ashok Leyland Ltd – country’s second-largest commercial vehicle manufacturer – on Thursday reported a standalone net loss of ₹19.39 crore for the quarter ending December 31, as sales of its commercial vehicles remain subdued due to Covid-19 induced economic downturn and revised load carrying norms. The Chennai-based company reported a net profit of ₹27.7 crore in the corresponding quarter.
On a sequential basis though the net loss reduced substantially from ₹146.6 crore reported in the September quarter as sales of its commercial vehicles improved as a result of gradual recovery in economic activity.
Revenue from operations during the quarter improved by 19.8% year-on-year to ₹4814 crore on the back of a 7% increase in vehicle sales and 12% jump in average selling price of its Bharat Stage 6 trucks and busses. On a month-on-month basis revenue jumped from ₹2836.58 crore in the September quarter as sales of vehicles improved with the unlocking of the economy.
As a result of the recovery in the topline, the operating profit or the earnings before interest, tax, depreciation and amortization increased by 13% to ₹250 crore. Due to the adverse impact of increase in commodity prices the operating margins contracted by 30 basis points to 5.3%.
Ashok Leyland’s net debt also reduced from ₹2880 crore at the end the December quarter from ₹3076 crore September quarter.
“The performance for this quarter which resulted in a positive EBITDA of 5.3 % was made possible owing to the revenue enhancement and operational efficiency initiatives of the company during challenging times. LCV, After Market, Defence and Power Solutions businesses have performed really well during the quarter. The focus on resetting the operating cost to revenues and material cost optimization will continue," said Gopal Mahadevan, director and chief financial officer, Ashok Leyland.
“As the worst phase of current down-cycle for M&HCV segment as well as AL seems to be over now, we believe likely up-cycle in FY22E and FY23E would bring back high earnings growth (98% CAGR) and valuation expansion, which would lead to sharp upside from the current level," said Mitul Shah, head of research, Reliance Securities.