Summary
Ashok Leyland Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 11, 2026, 5:15 p.m. IST
Event Participants
Executives 2 K.M. Balaji (CFO), Shenu Agarwal (MD & CEO)
Analysts 8 Amyn Pirani, Chandramouli Muthiah, Gunjan Prithyani, Kapil Singh, Mukesh Saraf, Pramod Amthe, Pramod Kumar, Raghunandhan N.L., Rishi Vora
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹11,534 crores | +21.7% YoY; Highest ever Q3 revenue driven by strong volume growth post-GST rationalization. |
| EBITDA | ₹1,535 crores | +26.7% YoY; Record performance supported by volume scale and cost-saving initiatives. |
| EBITDA Margin | 13.3% | +50 bps YoY; Expansion achieved despite 50-70 bps headwind from commodity inflation and mix. |
| PAT (Before Exceptional) | ₹1,105 crores | +45% YoY; Reflects strong operational leverage and improved financial performance. |
| Domestic MHCV Volume | 32,929 units | +23.4% YoY; Outpaced industry growth of 21%, resulting in market share gains. |
| Domestic LCV Volume | 20,518 units | +30% YoY; Significant growth beating industry average of 23%. |
| Export Volume | 4,965 units | +20% YoY; Broad-based growth across GCC, Africa, and SAARC “home markets.” |
| Net Cash Position | ₹2,619 crores | +₹1,660 crores YoY; Stronger balance sheet providing cushion for future investments. |
| MHCV Market Share | 30.9% | +60 bps YoY (YTD basis); Gains excludes defense and EV bus segments. |
Geographic & Segment Commentary
- Domestic MHCV Trucks: Volume of 27,615 units in Q3; segment saw a 34% growth in MAVs specifically. Management noted a shift in demand from retail buyers initially to bulk buyers projecting needs 3-4 quarters ahead.
- International Operations (IO): Revenue share increased to 8% from 6% YoY; volume up 30% YTD. The company is establishing ASEAN as its fourth home market with new distributor partnerships in Malaysia and Philippines.
- Non-CV Businesses: Defense revenue surged 84% YoY with a strong tender pipeline; Power Solutions grew 45% YoY. Aftermarket revenues saw a steady 10% YoY increase.
Company-Specific & Strategic Commentary
- Product Innovation: Launched “HIPPO” tractors and “TAURUS” tippers with 320-360 HP engines to target premium heavy-duty segments. A new 4.1-ton Bada Dost was introduced to address white spaces in the LCV category.
- EV Strategy: Inaugurated a dedicated EV plant in 14 months; Switch India is EBITDA/PAT positive YTD FY26. Management targets Switch India to be free cash flow positive by FY27.
- Network Expansion: Added 75 MHCV and 77 LCV touchpoints YTD, specifically targeting North and Northeast India. Partnered with TVS Group for 13 new outlets in the NCR region to boost non-South penetration.
- ESG & Sustainability: Reached 80% Renewable Energy (RE) status globally, with Tamil Nadu plants operating at 94% RE. The company is now in the top 2% of the DJSI ESG score for its sector.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Industry Growth | High growth in H1 FY27 | Favorable base effect (April-Oct) and multi-year replacement cycle triggered by GST reset. |
| Switch FCF | Free Cash Flow Positive by FY27 | Driven by ramp-up of electric bus deliveries (1,350 unit order book) and E-LCV sales. |
| Bus Capacity | 20,000 units per annum | Expected shortly following the inauguration of the Lucknow plant and existing plant ramp-ups. |
| Margin Recovery | Sustained improvement | Plans to recover 50-60 bps commodity hits via price hikes and reduction in discounts. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Inflation | Rise in PGM, copper, and aluminum impacted gross margins by ~50 bps in Q3; steel remains benign but non-ferrous is volatile. |
| Product Mix | Recent surge in ICV/LCV (retail-led) vs. Heavy-duty (bulk-led) has caused temporary gross margin compression. |
| Regulatory Costs | Mandatory ADAS and air-conditioning regulations may increase vehicle ASPs, though management believes customers now value safety/comfort. |
| Financing Merger | Reverse merger of HLF with NDL Ventures faced initial delays; now awaiting final closure after receiving approvals. |
Q&A Highlights
The CV Cycle & GST Impact
- Question: Is the current growth sustainable or is it just a post-GST bunching? (Gunjan Prithyani)
- Answer: Growth is fundamental; freight demand and rates are rising simultaneously. Historically, fleet age has moved from 7.5 to 10.5 years, and the GST price reduction is the trigger for a massive replacement cycle (Shenu Agarwal).
Margins & Pricing
- Question: How will you manage margins given surging commodity prices? (Pramod Kumar)
- Answer: While there was a notion not to hike prices immediately after GST cuts, the company is now reducing discounts and taking price circulars to recover 60+ bps (Shenu Agarwal/K.M. Balaji).
Capital Allocation & Subsidiaries
- Question: What are the investment plans for OHM (E-MaaS)? (Amyn Pirani/Pramod Amthe)
- Answer: ₹300Cr invested out of ₹600Cr earmarked; beyond that, external fundraising will be sought. OHM only bids for GCC contracts with healthy double-digit IRRs (Shenu Agarwal/K.M. Balaji).
Market Penetration
- Question: How are you gaining share in non-South markets? (Raghunandhan N.L.)
- Answer: North market share has moved from 15% to 25%; average national share is ~31%. The TVS partnership in NCR will provide 13 high-quality outlets to further bridge the gap (Shenu Agarwal).
Key Takeaway
Ashok Leyland delivered its best-ever Q3 performance with revenues of ₹11,534 crores (+21.7% YoY) and EBITDA margins of 13.3%, successfully navigating a 50 bps commodity headwind. The quarter was defined by a structural shift in the domestic CV industry, where GST rationalization triggered a long-awaited replacement cycle, reducing the average fleet age from its historical high of 10.5 years. Strategically, the company is diversifying its revenue mix, with Defense and Power Solutions growing 84% and 45% respectively, while expanding its geographic footprint in North India and the ASEAN region. Despite temporary gross margin compression due to product mix and non-ferrous metal inflation, management remains optimistic about H1 FY27 growth prospects. Looking ahead, the focus remains on scaling the EV business through Switch India and achieving free cash flow positivity by FY27, backed by a strong net cash position of ₹2,619 crores.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: