Ashok Leyland reports Rs 147 crore Q2 loss due to weak demand for commercial vehicles

MUMBAI: Hinduja Group flagship Ashok Leyland on Friday reported Rs 147 crore loss for the September quarter as revenues declined 28% due to weak demand for commercial vehicles in the wake of the pandemic and overcapacity in the transport sector.

Revenue for the fiscal second quarter fell to Rs 2,837 crore from Rs 3,930 crore a year earlier. The company had reported a profit of Rs 39 crore in the corresponding quarter last year.

Earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 65% to Rs 80 crore while Ebitda margin contracted by almost 3 percentage points to 2.8%.


“While the challenges in the market due to Covid-19 continue, the company has seen a marked improvement in the company’s performance in this quarter," managing director Vipin Sondhi said. "As we go forward, our focus on customer acquisition and network expansion will continue," he added. In the preceding quarter, the company incurred a loss of Rs 389 crore as revenue declined by 89% year-on-year to Rs 651 crore.

Ashok Leyland generated Rs 1,208 crore of cash from operations after capital expenditure and investments, which helped it bring down net debt to Rs 3,076 crore from Rs 4,284 crore in the previous quarter, according to a statement from the company.

"We expect Ashok Leyland’s volume to fall by 26% in FY21, while it would record strong 106% and 18% growth in FY22 and FY23, respectively," said Mitul Shah, the head of research at Reliance Securities. Shah predicted the company’s market share to be stable and assumed its Ebitda margin “conservatively” at 10.8% in FY22 and 11.4% in FY23.