India’s Ashok Leyland beats quarterly profit view on demand for high-margin heavy vehicles

Indian truck and bus maker Ashok Leyland reported a higher-than-expected rise in fourth-quarter profit on Friday thanks to healthy demand for its margin-boosting, heavier load-carrying models.

The Hinduja Group-owned automaker reported a profit of 12.46 billion rupees ($146 million) in the quarter ended March 31, a 38.4% rise over the previous year.

Analysts, on average, expected the company to report a profit of 11.09 billion rupees, according to data compiled by LSEG.

Ashok Leyland’s overall sales grew 5%, with those of its larger models climbing 7%, it said in its quarterly update in April.

The company benefited from lower discounting compared to a year before, analysts said, while higher contribution to sales from its more profitable heavy commercial vehicles (CV) helped.

The segment, which includes vehicles such as the “BOSS” truck, forms two-thirds of Ashok Leyland’s overall sales.

The low-margin small CV segment’s contribution to Ashok Leyland’s overall sales declined.

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Industry-wide sales of commercial vehicles grew 1.5% in the January-March period, with the medium and heavy models’ 3.9% sales jump driving growth.

Rival Eicher reported profit at its CV joint venture with Volvo doubled due to high demand, while Tata Motors reported a profit decline as demand for its small CVs stayed low.

Ashok Leyland’s shares closed 0.3% higher on the day, little changed after the results.