Ashok Leyland's Q2 Profit Holds Steady, Revenue Climbs 9%: Is H2 FY26 the Real Story?

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Updated on 12 Nov 2025, 03:59 pm

**News Summary**: Ashok Leyland announced its Q2 FY26 standalone net profit was Rs 771.06 crore, a marginal increase from Rs 770.10 crore in the same period last year, largely due to muted domestic demand. However, standalone revenue from operations saw a healthy 9% year-on-year growth, reaching Rs 9,588.18 crore. Profit before exceptional items and tax increased by 23% to Rs 1,083 crore. The EBITDA margin improved to 12.1% from 11.6% year-on-year.

**Volume and Demand**: Total commercial vehicle (CV) volumes (domestic and exports) increased by 8% to 49,116 units. Domestic medium and heavy commercial vehicle (MHCV) sales, excluding defence and EV, grew a modest 3% to 26,307 units, with truck volumes up 4% and bus volumes flat. Domestic light commercial vehicle (LCV) volumes rose 8% to 16,596 units.

**Future Outlook**: Managing Director & CEO Shenu Agarwal expressed optimism for the second half of FY26, anticipating stronger growth driven by the effects of the GST 2.0 rollout and increased government capital expenditure. He noted an uptick in October volumes, with MHCVs growing around 7% and LCVs 15%.

**Order Book & Exports**: The company has a significant order book for buses, including 2,500-3,000 units from state transport undertakings and 1,500 units for its electric subsidiary, Switch Mobility. Export volumes surged 45% year-on-year, primarily due to strong bus exports to West Asia and a pickup in Sri Lanka.

**EV and New Ventures**: Ashok Leyland's electric bus manufacturing facility in Lucknow is slated for inauguration within 30-60 days. The company is also exploring a foray into Battery Energy Storage Systems (BEES), with plans for an initial investment of around Rs 500 crore for battery pack assembly, followed by cell manufacturing in phase 2. An investment of Rs 5,000-10,000 crore is planned over 7-10 years for battery manufacturing in partnership with CALB Group.

**Consolidated Performance**: At the consolidated level, net profit rose 7% to Rs 819.7 crore, aided by the closure of its loss-making UK arm of Switch Mobility and growth at its NBFC subsidiary, Hinduja Leyland Finance.

**Dividend**: The board recommended a 100% interim dividend of Rs 1 per share.

**Impact**: This news indicates resilience in Ashok Leyland's core business despite economic headwinds and highlights strategic investments in future growth areas like EVs and energy storage. The positive outlook for H2 FY26 could boost investor confidence and potentially impact the company's stock performance. The improved margins and export growth are also positive signals. **Rating**: 7/10