Ashok Leyland slides 6% as axle load norms, political uncertainty may hit growth

Ashok Leyland is still expecting 10-15 percent growth in industry volumes as it expects pre-buying of vehicles before the implementation of BS-VI transition effective from April 1, 2020.

Ashok Leyland shares lost 6 percent intraday on Friday after the company in a conference call said the growth could be flattish in Q4FY19 and Q1FY20 due to axle load norms and political uncertainty.

The stock was quoting at Rs 79.65, down Rs 4.85, or 5.74 percent, on the BSE at 11:18 hours IST.

The company is still expecting 10-15 percent growth in industry volumes as it expects pre-buying of vehicles before the implementation of BS-VI transition effective from April 1, 2020.

Hence, there is no impact on medium heavy commercial vehicle (MHCV) and light commercial vehicle (LCV) business due to BS-VI transition, it said, adding but there is an uncertainty on axle load norms which would be continued in Q4FY19 and there would be political uncertainty which could impact Q1FY20 earnings.

Leyland said, "Confluence of bad news in export markets like Sri Lanka and Middle East have been hitting demand, hence we are re-drawing our export strategy."

Company's market share dipped by 1.5 percent to 31.9 percent. "We stayed away from deep discounting, hence lost market share," it said.

The country's second largest commercial vehicle maker's third quarter profit dropped sharply by 21.5 percent year-on-year due to lower sales performance and lower other income.

Revenue from operations during Q3 slipped 12 percent to Rs 6,325 crore YoY as sales volumes during the quarter dropped 6.1 percent YoY and 15.8 percent QoQ.

Tight liquidity, weakening fleet operator profitability and excess freight capacity hit sales. Medium & heavy commercial vehicle sales volumes were down 17 percent to 29,810 units and light commercial vehicle sales increased 27.7 percent to 13,953 units YoY.

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