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Ashok Leyland sees weaker margins despite firm vehicle demand
EBITDA margin fell to 10.1% in Q1FY27 from 14.6% in Q4FY26, as raw-material and staff costs offset cheaper inventory.
Ashok Leyland said it expects industry growth in the June quarter (Q1FY27) to build, with Q2 growth projected to exceed the 13% to 14% pace seen in Q1. The company also expects medium and heavy commercial vehicle (M&HCV) growth in the high single digits in FY27, with potentially stronger light commercial vehicle (LCV) growth.
In Q1FY27, standalone revenue rose 10.4% year on year to ₹9,634 crore, helped by a 10% increase in volumes to 48,763 vehicles. LCV volumes increased almost 20% to 19,339, while M&HCV volumes grew 4.8% to 29,424, and average price realization was almost unchanged at ₹19.8 lakh per vehicle.
Despite solid volume trends, margins were a key concern. EBITDA margin dropped to 10.1% in Q1FY27 from 14.6% in Q4FY26 and 11.1% in Q1FY26, driven by higher raw-material and staff costs, partially offset by cheaper opening inventory that covered 20% to 25% of quarter requirements.
Ashok Leyland noted domestic demand improved sharply in July versus June, while it expects cost pressures to peak in Q2 before easing in Q3. The company also said replacement demand could support growth as better financing conditions and lower interest rates encourage operators to replace older trucks, and it reported export volumes fell 18% in Q1FY27 due to disruptions at its United Arab Emirates plant before production recovered to around 600 vehicles a month in July.