Heavy discounting, muted demand likely to impact Ashok Leyland's margins

Ashok Leyland's volume performance is expected to remain subdued over the next few months

Despite a better-than-expected show in the December quarter, the Ashok Leyland stock has shed over 3.5 per cent since then, and lost a quarter of its value since December. The Street is worried that the high level of discounts, a weak freight market, and costlier funding could impact volumes for the truck maker.

While the firm outperformed the sector in January by recording 13 per cent year-on-year growth in volumes on a low base, higher volume of buses and a build-up in inventory at the dealer level, overall demand still remains weak. Analysts at Emkay Research believe there has been a