Ashok Leyland will be reporting its fourth-quarter earnings on Friday and analysts expect the commercial vehicle maker to report strong volume growth this time around.
- On a quarter-on-quarter (QoQ) basis, there is an expectation that things could improve for Ashok Leyland. In terms of volumes, it has outperformed the industry this time around. So the volumes have recovered in Q4 after that big fall was seen in Q3. This quarter, the volumes have gone up by 1.3 percent on a year-on-year (YoY) basis and 36 percent on a sequential basis to come in at 59,500 units.
- The medium and heavy commercial vehicles (M&HCV) space is still under a bit of pressure. Sales are down by about 0.9 percent but the light commercial vehicle (LCV) space has grown well. So this time it has been an 8.5 percent YoY growth in the LCV space and a double-digit growth on a sequential basis.
- The big takeaway is that, sequentially, the volumes have improved and that is the reason sequentially margin improvement will be seen as well. About 190 basis points (bps) QoQ is the margin improvement.
- The company has undertaken a few price hikes to pass on raw material cost, which will showcase in this quarter’s numbers. So this time the analysts are expecting the margins at 12.2 percent compared to the last three quarters of 10 percent margins.