According to Dheraj Hinduja, chairmen of the third largest commercial vehicle manufacturer in the country, the company is not looking for acquisitions for acquiring companies, as it continues to expect the right opportunities on the growing markets, in the middle of the announcements of the Mahaindra rivals rivals and Mahindra Ltd.
Hinduja said that Leyland is currently focusing on high growth markets such as India, ASEAN and Western Asia.
“Europe has been quite depressing for a long time. From our point of view, today, where India stands in its abilities, quality and our dealers’ base, we have the potential to supply global markets from India,” Hinduja said.
He added that the company will still not avoid acquisition if it helps to gain access to new technologies or markets. “But above all, India has the advantage of other markets,” Hinduja said.
Ashok Leyland ended FY25 with a net surplus of cash £4 242 crore and £3,284 crore was generated in the fourth quarter. Generating such cash put the company in a position to focus on acquisitions, unlike FY24 when it ended a year on £89 debt crore.
Ashok Leyland shares on Monday jumped by 8.15%to settle down £131.90 per piece on the national stock exchange. This year, the shares increased by 18.39% compared to a 9% increase in the handy automatic index.
While Leyland looks cautiously deploying excess means, Tata Motors and Mahindra and Mahindra sprayed money for key acquisitions to strengthen the game of commercial vehicles when the market was slow.
Tata Motors announced the acquisition of an Italian commercial vehicle manufacturer Iveco for 3.8 billion euros in July, while Mahindra has acquired a truck and SML ISUZU buses manufacturer for £555 crore in April.
These acquisitions came when the utility vehicles in India remained flattened and dropped by 0.1% in FY25 per 1 million units. Ashok Leyland held 16.6% of the market share after sold 167,465 trucks and buses during the financial year, almost unchanged from FY24.
With the growth environment lukewarm on the commercial vehicles, the CFO of Tata Motors PB Balaji told investors 31.
“The market absorpus is very stable in commercial vehicles. This is not too disturbing business. Diversification of cash flows is important for maintaining growth in business,” Balaji explained.
Hinduja, however, had a different view of this problem.
“Every company decides on its focus on its focus, where we focus on future technologies today. Building the future, where we can deal with global markets as Indian manufacturers. We do not have to have a global production track in specific markets where production can be high,” Hinduja said.
In March this year, Ashok Leyland announced that its mobility for subsidiaries with electric vehicles will try to end operations in the UK and focus on India due to weak demand for these vehicles in the European nation.
Analysts note that the conservative approach of Ashok Leyland has led to better health in the balance sheet and has become a growth. In April to June quarter, Leyland’s profits increased by 21% year -on -year £658 crore.
“The disciplined approach of Ashok Leyland to inorganic growth excels in contrast to the more aggressive strategies of the acquisition of Tata Motors and Mahindra,” said Shidhar Kallani, research analyst – car on Axis Securities.
Kallani noted that with fortified balance sheet and net surplus of funds, the company has the ability to continue acquisitions, but the management indicated that only the opportunities that complement its basic aspects in technology, EV and access to the global market.
“Although this measured attitude may seem conservative, it ensures financial flexibility and long -term creation of shareholders,” he said.
Others, however, note that there are dark clouds regarding the company’s growth prospects, because the Indian market falls under intensive pressure from competition and low demand.
“We assume the inverted performance 1% Cagr compared to the FY25-28E due to reasonable levels of use on transporters, which increases the competitive intensity of railways and a high base,” wrote analysts in Nuvama institutional shares on August 14th.
(Tagstotranslate) Ashok Leyland
