Ashok Leyland Limited a flagship company of Hinduja Group is presently engaged in manufacture and sale of commercial vehicles. It manufactures engines for industrial and marine applications, forgings, and casting. Its products portfolio includes buses, trucks, engines, defense, and special vehicles. It is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world, and the 19th largest manufacturers of trucks. It offers a varied range of products starting from 18-seater to 82-seater double-decker buses, from 7.5 ton to 49 ton in haulage vehicles, from numerous special application vehicles to diesel engines for industrial, marine and genset applications. Headquartered in Chennai, India, Ashok Leyland's manufacturing footprint spreads across the globe with 9 plants; including one each at Great Britain and Ras Al Khaimah (UAE). It Joint Venture partners include John Deere (USA) for Construction Equipment, Continental AG (Germany) for Automotive Infotronics and the Alteams Group for the manufacture of high-press die-casting extruded aluminum components for the automotive and telecommunications sectors. As per FY23 report company has sold 114,247 Medium and Heavy commercial vehicles in the domestic market comprising 10,767 buses and 103,480 trucks including Defence vehicles, registering a growth of 75.5% and posting a market share of 37% and in Light vehicle segment company registered sales of 66,669 vehicles with 28% growth from previous year. Hinduja Tech Limited (HTL), a subsidiary of the Company, acquired Drive System Design Limited (DSD), known for developing innovative solutions for electrified propulsion systems.  Recently the Company launched the 42Ton and 44Ton Tractor trailer models, along with introduction of CNG variants in the Haulage segment. It also launched 5 new products and their variants, which now has presence in over 25 countries in Africa for retail market operations. It launched Jeet 4x4 in Light vehicles segment during Defence expo. On retail front it added 80 new MHCV outlets & 73 new LCV outlets during the year, increasing the total count to 809 MHCV touch-points and 620 LCV touchpoints respectively. In MHCV - Trucks (Domestic) company launched new products which include Ecomet Star 1815HE, the first-in-industry 2620 6X2 LA, Partner Super, 42T & 44T Tractors. It is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world, and the 19th largest manufacturers of trucks.

Fundamentals (FY22-23):

Financial Results:

Company’s Net Sales was at Rs 9,691.32 crore in June 2023 up 34.18%, Quarterly Net Profit at Rs. 543.89 crore in June 2023 up 699.25% and EBITDA stands at Rs. 1,552.77 crore in June 2023 up 348.88% as compared to June 2022. Company’s EPS has increased to Rs. 1.85 in June 2023 from Rs. 0.48 in June 2022.

Key Points:

1. Reliance Industries Limited (RIL) & Ashok Leyland jointly unveiled India’s first Hydrogen Internal Combustion Engine (H2-ICE) powered Heavy Duty truck. It was was flagged off by Prime Minister Narendra Modi today in Bangalore at the India Energy Week.
2. Company has bagged an order from TN STU’s (Tamil Nadu State Transport Undertakings) for 1,666 buses being the single largest BSVI order received from State Transport Undertakings. Ashok Leyland has already been the most preferred brand by TN STU’s with more than 18000 Ashok Leyland buses operational in its fleet, comprising over 90% of total fleet.
3. Ashok Leyland recently inaugurated a new ‘Women-centric Cabin Trim Line’ at its Pantnagar plant to promote gender diversity and equity and to attract more women to the manufacturing industry.
4. Company has recently launched the ecomet Star 1915 truck with GVW of 18.49T in the ICV segment. The truck provides industry-leading fluid efficiency and the best payload capacity tailored for long-distance haulage customers who prioritize higher payload capacity with 4-cylinder engines.
5. Company has also bagged an order for 1,282 fully built buses from Gujarat State Road Transport Corporation (GSRTC) and it is one of the largest from a State Transport Undertaking for a single OEM.
6. Recently the company acquired 100% shares of Ohm Global Mobility Private Ltd (OHM) from OHM International Mobility Ltd for a nominal consideration of Rs 1 lakh. As the company is yet to become operational the consideration was nominal. With this move, OHM becomes a 100% subsidiary of the company. Ashok Leyland has also announced that it will be investing up to INR 300 Cr as equity into OHM to operationalize the company. In addition, existing E-MaaS contracts will be transferred to OHM subject to necessary approvals.
7. Company is the largest supplier of logistics vehicles to the Indian Army and recently it bagged significant order valued at INR 800 Crores in the Defence Sector. The order includes the procurement of the Field Artillery Tractor (FAT 4×4) and the Gun Towing Vehicle (GTV 6×6).
8. Company has announced a strategic partnership with Cholamandalam Investment and Finance Company Limited (Chola), the financial services arm of Murugappa Group today, to facilitate inventory financing for the Ashok Leyland dealers.The new alliance aims to provide 130 Ashok Leyland dealerships nationwide with an array of comprehensive inventory funding options to address their working capital requirements effectively.
9. Company has also bagged supply order for 500 buses to Sri Lankan Transport Board (SLTB). As a part of the order, the company recently delivered 75 buses to the nation on its Independence Day.
10. Company recently showcased seven advanced mobility solutions at the Auto Expo 2023 which includes Battery Electric Vehicle, Fuel Cell Electric Vehicle, Hydrogen Internal Combustion Engine (ICE) Vehicle, Liquefied Natural Gas Vehicle, Intercity CNG Bus and A mini passenger bus which they will launch in upcoming years.
11. Company recently launched a new ICV Platform, “Partner Super” with 914, 1014 & 1114 models in the 9.15T, 10.25T and 11.28T GVW category respectively. The newly launched platform is designed with a contemporary tilt-able day cabin to provide superior driver comfort and has the best-in-class payload capacity. The Partner Super will address customer needs in rated load applications, like e-commerce, beverage, FMCG, whitegoods, Parcel, Fruits etc., which seek better mileage.
12. Company has reached yet another milestone by rolling out its 1,00,000th unit of AVTR, from its Pantnagar plant, Uttarakhand. The AVTR has achieved this remarkable milestone within 30 months of its launch.
13. Indian Institute of Technology Madras (IIT Madras) Researchers at National Centre for Combustion Research and Development (NCCRD) collaborated for development and commercialization of ‘Swirl Mesh Lean Direct Injection (LDI) system’ technology for developing a series of hybrid Electrical Vehicles using this turbine technology.  IIT Madras Researchers at NCCRD are developing an indigenously-designed Micro Gas Turbine. Ashok Leyland has signed a letter of support to develop this technology for the heavy vehicles segment with NCCRD, IIT Madras. As part of the collaboration, Ashok Leyland has handed over  a 9-meter passenger electric bus to NCCRD.
14. Company has bagged international order for major fleets for 1,400 school buses in UAE- the company’s largest ever supply of school buses in UAE. The 55-seater Falcon bus and 32-seater Oyster bus – will be supplied from Ashok Leyland’s US$ 50 million state-of-the-art manufacturing facility in Ras Al Khaimah, UAE, which is the only certified local bus making facility in the entire GCC. 
15. Ashok Leyland’s authorized distributors, Deluxe Trucks and Buses in Kenya have signed a partnership with Kenya Commercial Bank to jointly promote the Ashok Leyland Brand of Vehicles. Ashok Leyland customers will now be able to access flexible financing options in a deal from Kenya Commercial Bank. The partnership will see customers enjoy up to 95% financing with an extended repayment period of 72 months as well as a comfortable 60-day payment holiday.
16. Companu has also announced its new distribution partnership with ETG group’s logistics, warehousing and distribution vertical, ETG Logistics (ETGL).  ETG is a global conglomerate operating across various segments, with a deep focus on uplifting Sub-Saharan Africa. As a part of partnership ETGL will operate dealerships for Ashok Leyland in 6 key Southern African countries as part of this strategic cooperation.
17. Ashok Leyland recently inaugurated three new 3S (sales/service/spares) dealership, ASL Motors Private Limited in Kutch which are located at strategic locations and connects important cities of Gandhidham, Mundra and Bhuj in Kutch District of Gujarat. The newly launched dealerships will play an important role for Ashok Leyland to increase its penetration in the Kutch region.

In last 3 Years the stock gave a whooping return of 128.53% as compared to the rise of Sensex and Nifty in the same period.

Company is market leader in commercial vehicle segment backed by its new product launches and advanced technology led products and having very good presence in India and even across the globe through its subsidiaries and Joint Ventures over the years. The demand for Commercial vehicles has been on a constant rise due to increase in market of logistics business along with government’s push towards faster on road logistics system through various initiatives which keeps Ashok Leyland in sweet spot to enjoy benefits from these transitions. Considering company’s huge presence across the globe, huge order book position, preferred company for defense vehicles, good financial performances and launching of vehicles using futuristic technologies such as Hydrogen fuel, Hybrid fuel, Electric vehicle and CNG in upcoming years investors can invest in this company for a long-term period.

HET ZAVERI

info@smartinvestment.in

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