Ashok Leyland Q1 earnings: Hinduja group flagship posts net profit at Rs 509 crore; lines up capex of up to Rs 800 crore for FY25

Hinduja group flagship Ashok Leyland on Thursday reported a 6 per cent year-on-year fall in its consolidated net profit to Rs 509 crore in the June 2024 quarter impacted by a deferred tax gain in the year-ago period for switching to the new tax regime.

The company, which posted a net profit of Rs 544 crore in the April-June quarter of the previous fiscal, said it has lined up a capex of Rs 750 crore to Rs 800 crore for FY25, which will mainly be used to launch new products.

Total income increased to Rs 10,754 crore in the first quarter against Rs 9,735 crore in the year-ago period, the company said in a regulatory filing.

Addressing a conference call, Ashok Leyland Chairman Dheeraj Hinduja said the commercial vehicle industry maintained the growth momentum in the first quarter contrary to the anxiety at the start of the year due to events like the general elections.

Industry volumes for the first quarter were at comparable levels to the previous peak of Q1FY19, he stated.

"The company's Q1 performance has beaten all expectations, we have been able to post excellent results with focused market performance while reining in costs," Hinduja stated.

Ashok Leyland CFO KM Balaji said in the first quarter of the last financial year, the company had to restate the deferred tax liability based on the new tax regime.

"This has resulted in a gain of Rs 172 crore where the tax liability was reduced by Rs 172 crore last year…If we remove that gain from last year then our profits are up by 30 per cent year-on-year," he added.

The company said it recorded its highest-ever CV (commercial vehicle) volumes in the April-June quarter at 43,893 units against 41,329 units in the year-ago period.

When asked about capex for FY25, Ashok Leyland Managing Director & CEO Shenu Agarwal said, "The capex estimate for the current year is roughly between Rs 750-800 crore".

This capex includes new products, he said, adding, "Most of our capex will actually go into new product development because right now we are not expanding our capacity. We have sufficient capacity for at least the next two to three years. Most of this capex would be either on sustenance of the current facilities or on the product development".

On the outlook for the rest of the year, he said the company is not in agreement with the original forecast made by various agencies at the beginning of the year that the industry growth will go down.

"We think that it will be at minimum flattish but there is a chance…for the industry to show good growth this year," Agarwal added.

Through Switch Mobility, the company is geared to participate in the growing EV market with a clear road map, he added.

With the expansion in revenues and efficient cost management, the company has seen its bottom line improving substantially, Agarwal said.

Shares of Ashok Leyland settled marginally higher at Rs 232.50 apiece on the BSE.