Leyland's margin run may go on

Shares of Ashok Leyland Ltd closed nearly 8% higher on Wednesday, as investors cheered the company's robust margin performance in the December quarter (Q3FY25).

- Manish Joshi

While sales volumes were already known, the surprise came from the expansion of standalone gross margin to 28.5%, up from 27.8% a year ago. This margin improvement was driven by a 3.7% year-on-year (y-o-y) rise in the average selling price (ASP) per vehicle to ₹20.3 lakh, outpacing the 2.6% increase in material costs to ₹14.6 lakh.

The gross margin expansion flowed through to the Ebitda margin, at 12.8%—its second-highest level in at least 10 quarters (see chart). Ebitda grew 9% y-o-y, despite revenue rising just 2.2% to ₹9,479 crore, underscoring the firm's pricing power and cost efficiency.