India’s CV market to hit new peak in FY24, outlook strong: Ashok Leyland

“We do think that we (industry) will hit a new peak and surpass the previous one,” he told ET. “The next six months look very promising. Even in the next 12 months, based on the customer feedback and the vehicle volumes that they are projecting, I don’t think that we are at the end of the boom cycle. The way the Indian economy is growing, we may not go through the traditional cycle of the CVs because the country itself is going through a very new situation with the growth rate.”

After hitting a multi-year low in FY21 due to the pandemic, India’s truck and bus market has been growing in the last couple of years. In FY23, it surpassed the FY18 peak with 962,000 vehicles. It had sold 856,000 in FY18, according to the Society of Indian Automobile Manufacturers.

Ashok Leyland posted a 181% year-on-year jump in net profit for the quarter ended September at ₹561 crore, riding on higher sales that rose 17% on year to ₹9,638 crore.

Helped by a better net realisation and lower commodity prices, the earnings before interest, taxes, depreciation, and amortisation increased to 11.2%. Raw material costs as a percentage to net sales dropped to 73% from 78% in the year ago quarter. Cost-saving programmes helped, company officials said.

Commenting on the discounting trend in the truck market, Gopal Mahadevan, chief financial officer of Ashok Leyland, said net realisation has been improving in the industry. “Industry is moving towards a better net realisation since the second half of last year,” he said, attributing it to lower discounts, price increases, and strong demand from road construction and mining besides healthy industrial output.Analysts, though, do not share Ashok Leyland officials’ optimism. According to a recent report from HDFC Securities, the MHCV (medium and heavy commercial vehicles) goods industry has slowed down over a high base to post 6.7% growth for H1. With even higher base in H2 and the likely impact of general elections, it’s expected to post mid-single-digit growth for FY24.