Leyland's margin run may go on

Climbing up Ashok Leyland's better sales mix in Q3FY25 led to strong margin performance.

- Manish Joshi

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).

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.