Ashok Leyland sees replacement cycle driving sustained CV growth, margins steady

Ashok Leyland expects demand momentum in the commercial vehicle market to remain healthy, supported by a strengthening replacement cycle and steady activity across key freight and infrastructure segments.The company is also optimistic about sustaining its operating performance, driven by a continued focus on product differentiation, premium offerings and improving service capabilities across markets.

In the October-December quarter of 2025 (Q3FY26), Ashok Leyland reported strong year-on-year (YoY) growth across key financial metrics, with revenue rising 22% to ₹11,533 crore from ₹9,479 crore a year ago. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the quarter increased 27% to ₹1,535 crore from ₹1,211 crore in the corresponding period last year. In comparison, the EBITDA margin improved to 13.3% from 12.8% a year ago.
The market capitalisation of the Chennai-based company stands at around ₹1,23,615.27 crore, and the stock has gained close to 92% over the past year.

These are edited excerpts of the interview.

Q: The last few months have been strong, with double-digit volume growth across all segments. Do you expect this momentum to continue? Could you also share your outlook for the fourth quarter and where we currently stand in the commercial vehicle cycle?

A: November and December have been very strong months. And even January was very strong. It was actually stronger than December. And for February also, we are seeing a lot of momentum on the ground. I think the inquiry and the lead pipeline are very robust, and therefore, I would say that this would be the fourth month in a row where we are expecting very strong growth momentum in the commercial vehicle (CV) industry.

The other good thing is that it is across the range, across the segments, whether it is light commercial vehicles (LCVs) or intermediate or heavy-duty. So, we are seeing this momentum building up everywhere.

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We have been talking about the issue regarding the ageing of the truck fleets in the country for many quarters now, and we all know that while historically, the age of the fleet has been around 7-7.5 years, of late, the ageing has increased to roughly about 10-10.5 years. And we were always hoping that there would be a trigger that would come for the industry, where it would kick in a fresh replacement cycle. And we believe, because this is already the fourth month of strong momentum, we believe that the replacement cycle has now kicked in. And if that is true, then this is not a small blip or a short-term impact of the goods and services tax (GST) rate cut and other factors, but we believe that this will continue for a much longer time.

Q: This is the highest-ever quarterly revenue and the 12th consecutive quarter of double-digit margins, despite higher raw material costs. Are you confident of sustaining margins at current levels going ahead? And how do you see raw material costs trending from here?

A: Yes, you are right. This has been a splendid quarter for us, quarter three. We have created a best-ever revenue, an all-time-high EBITDA, and an all-time-high profitability. Profit before tax (PBT), profit after tax (PAT) – everything is an all-time high for the quarter, and even on a year-to-date (YTD) basis, we are much ahead of our performance in the last year, the first nine months.

So, I think our strategies are showing up in the results. On the market-share side, we are very focused on creating differentiation and premiumisation in our products. And equally important is that we are very focused on the service side. We do believe that market share is something very fundamental, which you can only achieve in the medium run and long run, only through creating some differentiation in your product or in your service. So, the teams are very focused on those two aspects, and overall, we are happy with the results so far.

Q: Could you also give us the market share for both the medium and heavy commercial vehicle (M&HCV) business and the bus segments?

A: Our market share for the M&HCV has been close to 31%, which is higher than last year, for a similar period. And our LCV overall vahan market share is close to 12.7% or 12.8%, which is higher by about 70 or 80 basis points over the same period last year. So, in both segments, we are doing very well. Even in buses, we continue to maintain our leadership position with a market share above 40% now.

Q: You have reported another healthy quarter of export growth — 20% in quarter three and more than 30% in the first nine months of the year. Are you still maintaining the 20% to 25% target for 2025-26 (FY26)?

A: Exports are one of our key focus areas. We have done very well in Q3 — the export volume has grown by 20%. In the nine months ending December 31, the export volume has grown by 30%, so it’s a very strong growth. But I would say our ambition is even bigger.

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We still believe that there is a huge headroom in our export volume, not just in the three home markets that we are already in, which is Gulf Cooperation Council (GCC), South Asian Association for Regional Cooperation (SAARC) and Africa, but we are also aggressively pushing and establishing our fourth home market in the Association of Southeast Asian Nations (ASEAN) countries also.

So, we would be continuing with good export volume growth in the future, and this would be on the back of not just the expansion of our distribution or our service capability in these markets, but it will also be on the back of the products that we are now exclusively developing for some of these home markets.