CHENNAI (Reuters) – Ashok Leyland reported a bigger-than-expected jump in third-quarter profit on Wednesday, benefiting from higher demand for its vehicles including trucks and buses as well as easing prices of raw materials.
The Indian trucking sector is making a comeback after two years of pain from higher commodity prices and semiconductor shortages, as mines increase output, online shopping boom sustains and infrastructure projects in the country pick up.
“Replacing old polluting vehicles is an important part of greening our economy,” Finance Minister Nirmala Sitharaman said in her budget speech on Wednesday.
Adequate funds have been allocated to scrap old vehicles of central government and states will also be supported in replacing old vehicles and state ambulances, she added.
“The announcement … presents a significant opportunity for fleet modernisation,” Executive Chairman Dheeraj Hinduja said in a statement.
For the third quarter ended Dec. 31, Ashok Leyland’s profit soared to 3.61 billion Indian rupees ($44.17 million), from 57.6 million rupees a year earlier. Analysts polled by Refinitiv, on average, had expected nearly 3.2 billion rupees.
“The softening of commodity prices has also been positive,” Hinduja said.
Chennai, Tamil Nadu-based Ashok Leyland said it sold 28,221 medium and heavy commercial vehicles in India, up 69% from a year earlier. It also sold 16,405 light commercial vehicles, up 15% from the previous year.
Revenue from operations climbed to 90.30 billion rupees from 55.35 billion rupees a year earlier.
Separately, Ashok Leyland said it sold 11,050 medium and heavy commercial vehicles (M&HCV), including trucks and buses, last month, up 28% from a year earlier, while light commercial vehicles (LCV) sales volumes jumped 17% to 6,150.
Shares in Ashok Leyland, which gained roughly 17% last year, closed over 1% lower at 147.70 rupees on Wednesday.
($1 = 81.7370 Indian rupees)
(Reporting by Praveen Paramasivam in Chennai; Editing by Krishna Chandra Eluri)
