Ashok Leyland’s record surge in over 2 years, big capex plans ahead

Record-breaking day for Sensex

On Monday, India’s benchmark indices reached new heights, with the Sensex hitting the psychological mark of 76,000 for the first time in its history. This milestone is not only important for BSE Sensex but also individual companies like Ashok Leyland.

Ashok Leyland’s remarkable performance

Ashok Leyland saw its stock rise by 7.1% to hit fresh all-time highs. On NSE it opened at Rs216 per share and later fell to an intraday low of Rs212.60 before finally closing at a record high of Rs 226.90. This has pushed Ashok Leyland’s market capitalization above Rs 66k cr.

Financial highlights

Although there was a year-on-year decrease of standalone revenue by 3.1% for Ashok Leyland in Q4FY24; it managed to raise ASPs by 2.8%. This reflects fewer discounts and improved pricing across its product portfolio. The Company realized a margin of 14.1% attributable to lower input costs and decreased employee expenses. The management is targeting further enhancement of EBITDA margin into mid-teens through strategic pricing actions, cost cutting measures, and disciplined discount management.

Growth across sectors

There was significant growth in spares, defence and power solutions businesses for Ashok Leyland during FY24.The firm intends to incur capital expenditure between Rs 5bn-7bn in on FY25 basis.

Future prospects

Ashok Leyland is well-positioned to gain market share and volume growth. This will come as a result of the launch of new products and growing demand for higher tonnage commercial vehicles (CVs). Furthermore, more than six new launches including EVs for FY25 aimed at bridging gaps in the light commercial vehicle space.

Stock performance

This surge was Ashok Leyland’s highest one-day move in over two years with the scrip surging almost 28% since January. This indicates that the firm has had a good performance so far this year and there is positive sentiment surrounding it.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.