Ashok Leyland hits over 2-year high on July sales data; up 18% in 4 days

The company reported an 81 per cent year-on-year growth in total sales to 8,650 units in July 2021

Shares of Ashok Leyland hit an over two-year high of Rs 143.25 as they gained 6 per cent in intra-day trade on Tuesday after the company reported an 81 per cent year-on-year (YoY) jump in total sales to 8,650 units in July 2021. It had sold 4,776 units in the same month last year. On a sequential basis, Ashok Leyland's total sales surged 34.15 per cent during the month from 6,448 units sold in June 2021.

The stock of Hinduja Group company was trading higher for the fourth straight day, having rallied 18 per cent during the period. The market price of commercial vehicle (CV) manufacturer had hit a record high of Rs 168 on May 8, 2018.

In July 2021, the company’s total domestic medium and heavy commercial vehicle (M&HCV) sales jumped 132 per cent YoY to 3,473 units, while total domestic light commercial vehicle (LCV) sales were up 67 per cent YoY to 4,656 units over July 2020.

Switch Mobility, the Electrified Commercial Vehicles company and a subsidiary of Ashok Leyland on July 30 announced a strategic agreement with Dana Incorporated (Dana), the global leader in drivetrain and e-propulsion systems, to make a minority investment in Switch.

Switch Mobility will spearhead all future efforts in e-mobility in both global and domestic markets. Ashok Leyland has invested USD 130 million so far, and further investments of USD 150-200 million are anticipated in the next 2-3 years, to be mostly raised from strategic and financial investors.

Meanwhile, Ashok Leyland returned to profit after four quarters of loss, with a reported profit after tax of Rs 241 crore. The recovery in FY22 has been pushed out due to the impact of the second Covid wave, particularly for the passenger bus segment (which accounts for 20 per cent of aggregate demand).

The management is hopeful of a CV recovery from here on, meanwhile, the long-awaited railways’ dedicated freight corridor (DFC) between Palanpur in Gujarat and the NCR region (~650kms) has begun trial runs. "While Ashok Leyland has set up a subsidiary for electric vehicles (EVs), in the longer term, hydrogen-based technology will be essential for providing a sustainable solution, particularly for heavy commercial vehicles. EVs offer a viable solution for LCVS but the range is restricted to 300-400kms for HCVs," Aditya Makharia, Institutional Research Analyst, HDFC Securities said in the March quarter result update.