Ashok Leyland Limited (NSE: ASHOKLEY) Q1 2026 Earnings Call dated Aug. 14, 2025
Corporate Participants:
Unidentified Speaker
K.M. Balaji — Deputy Chief Financial Officer
K. M. Balaji — President Finance and Chief Financial Officer
Shenu Agarwal — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Nishit Jalan — Analyst
Gunjan Prithyani — Analyst
Kapil Singh — Analyst
Chandramouli Muthiah — Analyst
Pramod Kumar — Analyst
Raghunandhan NL — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Ashok Leyland Q1FY26 earnings conference call hosted by Axis Capital. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a Touchstone . Please note that this conference is being recorded.
Nishit Jalan — Analyst
Thank you. Good evening, everyone. Welcome to Q1FY26 post results conference call of Azure Cleveland. We are pleased to host the senior management team of the company today. We have with us Mr. Shenu Agarwal. Managing Director and CEO, Mr. K.M. balaji, CFO and also the investor relations team. I’ll now hand over the call to the management team for the opening remarks post which we can have the Q and A over to you, Shenu.
Shenu Agarwal — Managing Director and Chief Executive Officer
Thank you, Nishit. Good evening ladies and gentlemen. Thank you for joining in and for your trust in Ashok Leland. As always, I am pleased to share that we have had yet another quarter of remarkable performance with highest ever Q1 revenue, EBITDA and PAT. Our net profit in Q1FY26 was at rupees 594 crore higher 13% on yoy basis. Revenue was at rupees 8725 crore higher by 1.5% and EBITDA at rupees 970 crore higher by 6.4%. EBITDA margin was at 11.1% higher by 50 basis points over Q1 of last year. Our cash position net of debt continues to be positive at end of Q1 at roughly rupees 800 crores.
At end of the same period last year our net debt was 1200 crores reflecting a swing of approximately rupees 2000 crore on yoy basis. Our MSCV market share excluding defense and EVs in quarter one this year improved to 31.1% vis a vis 29.8%. During the same period last year, the 0 to 7.5 LCV Wahen market share also improved to 12.9% during Q1 which is 120 basis points improvement on YOY basis. Our focus on product premiumization, cost leadership and service excellence are helping us deliver improved profitability while growing our market share. This corroborates well with our strategic imperatives of profitable and sustainable growth.
While the domestic MHCV industry volume in Q1 declined by 2%, this was on a high base of last year where in Q1 last year the industry volumes had grown by approximately 10%. Despite decline in the industry volume, a shortclarent domestic MHCV volume excluding defense grew by 2% to be at 25,641 units. For Q1 this business a show Cleland domestic LCV volume was at 15,566 units higher by 1.4%. YoYo LCV Wahan sales was at 15,436 units higher 8% YoY. Our export volume was at 3,011 units higher by 29% on YoY basis. Our home markets outside India with GCC, Africa and SARC are going well despite all the geopolitical uncertainties.
Ashok Leyland products are gaining increasing acceptance in these markets with our approach of developing strong local presence and building products suiting the local requirements. Our non CV businesses are also growing as per the plan, our aftermarket revenues were higher 8% YoY and revenue from power solutions business was higher by 28.5%. Our defense order book and tender win pipeline is stronger than ever basis which we are confident to post a double digit revenue growth in FY26. Material cost as a percentage of revenue for Q1 was at 70.6% at the same level as Q4 FY25 and 1.6% lower than same period last year.
This was a major achievement given the material cost pressures created by steel safeguard duty and tariff volatility. This was achieved by our continued focus on material and other cost savings along with better size realization and a healthier model mix. As mandated, we introduced ACS across our product lines in Q1. The migration was smooth and the entire operations and supply chain was fully aligned in the transition. To offset potential impact on mileage from the AC introduction, we introduced Ashok Leland’s new I VAC system which is intelligent vehicle acceleration control system in many of our products to improve fuel efficiency.
We are preparing to launch a slew of new products in the balance of the year in both Ms. TV and LCV segments. These includes our foray into 280, 320 and 360 horsepower tippers, tractor trailers and multi axle vehicles with industry best peak power and torque, heavy duty aggregates and a host of other premium features. We are also preparing to launch our first offering in the LNG segment later this year with multiple models catering to different applications. On the Anvil are Also our upgraded 13.5 meter bus and an entirely new 50 meter bus with a very unique value proposition.
We shall also be unveiling a BI fuel product in the LCV range to cater to the demand in the large Metros. Many upgraded products for our international markets are also slated for launch this year. Our E trucks both on BOSS and AVTAR platform are gaining traction and proving their technical superiority as we continue to gain more customer orders. We hope that these products will further help us improve our market share across all the product segments in times to come. We are continuously augmenting our fully built capacity to cater to the growing demand. Our new plant in Andhra Pradesh inaugurated in Q4 of last fiscal is in the ramp up stage and will reach a capacity of 200 units per month by end of the year.
Our newest and most modern bus plant at Lucknow which is under construction will be operational from Q3FY26. We are also looking at enhancing capacity at our bus plants at Alwar and Trichy. We continue to expand our domestic Network. We added 23 MSCV touchpoints and 13 LCV touchpoints during the quarter with most of the additions in north and central part of the country. With these additions, total touch points for MSCV are now at 1073 and for HCV at 851. By end of the year we hope to cross 2000 touch points for both the product segments combined internationally as well, we are expanding our network in all our four home markets with South Africa, GCC and asean.
One of our key initiatives towards premiumization of our products is to achieve global standards on customer experience by transforming our service operations. This initiative has already started yielding initial results. Ashok Leland Ranking has improved to number one in Dealer Satisfaction Index and number two in Customer and Sales Satisfaction Index. Switch India is going from strength to strength. While last year Switch India turned EBITDA positive, we are happy to share that in Q1 the company has achieved Pvt Breakeven as well. As indicated earlier, our goal is to achieve pat positive status for Switch India in FY26.
The current order book for Switch India stands at 1500 plus buses. Regarding Switch UK, the redundancy process is in progress which is likely to get concluded by early Q3 FY26. This will lead to complete cessation of manufacturing and assembly facilities in the Sherburne UK facility. The production of E buses for UK and European markets is being moved to our other global production facilities. OM, our EMAS subsidiary is operating more than 850 buses with fleet availability of 98% plus. During the quarter OM added more than 200 buses to the operating fleet and is progressing well on its target of operating 2,500 plus buses and within the next 12 months.
All the GCC projects under execution are at healthy double digit IRR. OM is working diligently on the 10,000 plus EM E drive tender to further add to their growing fleet. Hinduja Leyland Finance and Hinduja Housing Finance continue to do well. HLF standalone AUM was at 50,430 crores and HHF AUM was at 14,265 crore, both registering 25% YoY growth. Total income for the finance subsidiaries was at rupees 1855 crores and the book value at end of the quarter was at 7,222 crores. On a consolidated basis the NNPA has come down to a healthy 1.63. Very recently HLF also received the final clearance from RBI to initiate a merger process with Next Digital paving the way for its listing.
We are making continuous progress on our ESG commitments as well. We have now signed four franchisee partners for Al Haris, our platform for RVSS registered vehicle scrap edge facilities. In our commitment towards Re 100 we have achieved 81% Re status as against 69% at end of FY25. With our TN plants, Tamil Nadu plants now at 95%. Our road to School and Road to Livelihood programs continue to grow extending their reach to about 5 lakh students now as part of RTS, capacity building sessions and career counseling were delivered to more than 11,000 students in the last quarter.
More than 200 women from 15 villages were enrolled into Road to Livelihood program. Looking back at the quarter we believe we have moved well on our strategic goal of delivering profitable growth. Given the high base of Q1 FY25, we feel satisfied delivering record revenue, EBITDA and Pat in Q1 of this year. We are optimistic about the growth prospects in Both MHCV and LCV given the low base of Q2 last year where especially the MHCV market was down, the fleet utilizations are holding up and freight rates and operator profitability are moving northwards. So far we have remained largely immune from tariffs and other geopolitical uncertainties.
We believe the uncertainties pertaining to commodities, especially steel, would also settle down in the coming quarters. RBI interest rate cuts have not yet fully transmitted to the ground but are likely to happen soon. The government capex spend also has been higher and is expected to further improve on back of these and this is our upcoming new product launches across different segments. We remain optimistic of volume and margin uptrend for Ashok Leland in the second half of the year. Thank you once again for your continued trust in Ashok Leland. I now hand it over to moderator for Q and A.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue you may press Star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. First question is from the line of Gunjan Prithiani from Bank of America. Please go ahead.
Gunjan Prithyani
Yeah, hi, thanks for taking my question. Just firstly on the margin side can you give us some color on what were the key variables? And we did see commodity pressures in this quarter. There was this mandatory AC cabin regulation as well. Despite that, we’ve somehow managed to keep the margin gross margin stable. So if you can give us what were the drivers to it and how should we sort of think going forward? Are there more commodity pressures to bear in mind in the next couple of quarters?
Shenu Agarwal
I’ll give you a short answer then I’ll ask. Maybe Balaji can give you a more detailed one. But like we told you last time, you know, while we were all worried about AC introduction bit whether we will be able to pass on the cost to the market. But to our surprise actually there is a huge amount of traction that we have seen in our customer base to adopt air conditioning. A lot of customers actually asked us even before the implementation date if we can provide them AC vehicles. So I think there is a kind of mindset shift happening in the customer base also and we are very happy that we could pass on the complete cost impact of ac.
And beyond that we were also able to improve our pricing and to some extent our model mix as well because multi actor vehicles which are the higher margin vehicles for us, they really improved on volume in quarter one. So yeah, I mean overall it was a good period commodity. We had a certain pressure especially on the steel side emanating from the safeguard duty. But I think that is also coming down Right now. So when we look at the spot price in the market in July it actually moving south now steel prices so we’ll see how it goes in quarter two.
But we think steel should also settle down to favorable levels.
K. M. Balaji
Even on the overhead side you would have noticed our other expenses we have reasonably controlled compared to the last quarter where it was around,000 50,000 60 crores you would have seen in absolute terms the the fixed costs have come down. Though in terms of lower revenue the percentage looks a bit higher. But in terms of absolute amount it has come down. As Shenu indicated it is a combination of better mix price recovery, commodity cost controls as well as the overhead controls. All these have helped us on top of it. The rest of the businesses like the spare parts has registered a good 8% growth year on year.
The power solution business has registered a growth of about 35% 49% 28.5% compared to the same period last year. In terms of revenue exports it has gone up. Export numbers volumes have gone up to. IT has crossed 3,000 vehicles in the current quarter compared to the last same period last year it is up by about 29%. So all this the non CB businesses have really contributed to the bottom line.
Gunjan Prithyani
Okay, got it. And my second question is on finance and congratulations. I think this was long, long due. Now what is the process forward? How soon do we see the conclusion of this restructuring that we were pursuing? And along with that if you can also sort of comment on what is happening to the financing landscape for. Because you know when I go through a lot of lending, you know lender or NBFC commentary through this result season it has indicated that there are some asset quality issues cropping up on the CV side. So you know is that something that you are also seeing either in Hinduja Leland Kanal’s book or otherwise from your customer segment which is these two.
K. M. Balaji
Yeah, we have a very long term process initially you know the shareholders of both the companies they like to meet and then you fix the ratios, the swap ratios with the shares and then you’ll have to go to the company law board, the nclt. You have a, you have long list of processes which needs to be complied with and it will take a minimum of 2, 3/4 in my guess. But I don’t want to hazard a guess because whatever time it takes, it takes.
Gunjan Prithyani
Okay. And on the financing side.
Shenu Agarwal
Yeah Gunjan on the financing side, you know we have been hearing in the news about some distress on the CV side. But you know upon deeper checking we, I mean we think like this is normally the phenomena at end of Q1, beginning of Q2, as soon as the monsoons start appearing. Right. So because I mean monsoon, I mean definitely the fleet utilization goes down substantially and therefore every year this is what it is. But we have, I mean internally we have checked with HLF and they don’t see any red flags right now.
Gunjan Prithyani
Okay, got it. Thank you so much. I’ll join back the queue.
operator
Thank you. Next question is from the line of Kapil Singh from Namura. Please go ahead.
Kapil Singh
Yeah, good evening sir. Congratulations on our resilient performance and also the dealer satisfaction rankings, that’s quite important. My question is on the demand, NSP demand itself. You know we talked about a lot of positive variables we have seen like the freight rates and operator profitability but it’s somehow not translated into demand and also replacement demand potential which we have previously discussed. So this is your assessment of the situation. Like what is holding back that replacement demand to come back and what is your outlook for the full year demand for both domestic as well as international?
Shenu Agarwal
Yeah, Kapil, thank you for that question. Let me just comment on the domestic first. Definitely we are all expecting that this huge aging of the fleets that we are seeing kind of more of a flattish industry for last couple of years or maybe three years. This doesn’t gel very well. Especially given that macro factors, macroeconomic factors are quite okay. So I mean the only reason we can say what is holding it is that the capex on the ground has to really be a little bit more higher. You know, last year we were in a situation when the capex was not as good as we were expecting.
Now it is started to turning out well and now the interest rates are also getting better. So at some point in time it should open up, you know, but it’s hard to say when it will be. Like I said, Q2 had a low base. So maybe Q2 could start, could be a trigger for a better cycle. July already we have seen that the MHCV market has grown by about 5%. So let’s see, I mean all the factors are pointing towards something better, some better demand. So let’s see when that happens.
Kapil Singh
Any outlook sir for the full year for domestic ?
Shenu Agarwal
Full year the outlook remains the same which is mid single digit growth for MHCV and slightly higher than that for lcv. But still mid single.
Kapil Singh
And on the international side.
Shenu Agarwal
International side. We are seeing a very good growth, I mean from all the markets. Actually Bangladesh or SARC and Africa have been a little bit short against our plan. For Q1 but those were temporary reasons. But I think SARC and Africa would also bounce back. In Q1 we had a 60% plus growth in GCC. We are actually running out of capacity in our UAE plant now. So I think GCC is doing very well and will continue to do well both UAE and Saudi. So 29% growth in Q1 we have achieved and we do hope that we will continue the momentum in the balanced part of the year.
Kapil Singh
Thanks sir. One question I also had on om, we have put in some capital, I think around 300 crores over there. So what is the total investment plan that we have for this entity since we’re talking about number of buses that will cross, I think 2500 in the next 12 months. So how much capital requirement is there for these 2,500 buses if you could help us understand that? And is there a plan to monetize this investment or make the balance sheet lighter?
Shenu Agarwal
Yes. So we are looking at some of those options. But just to Clarify, Ohm has 800 buses right now which are on their balance sheet. They will induct another, I would say maybe 700 more by March of the year. The rest of the thousand buses that they would have would be actually on the Switch balance sheet. But OHM would be operating those because these are the tenders that Switch had won prior to ohm’s existence. But OHM is actually running those because OHM is an EMAS company. However, coming to the funding part of it. You know previously we had invested 300 crores, now we are investing 300 more and this will be sufficient to take care of Ohm’s buses, Ohm’s operations up to March of 26 and beyond that.
We are very open at looking at some other options of fundraisers also. But we’ll let you know in maybe a few months from now.
Kapil Singh
Okay, thank you sir. Congratulations.
operator
Thank you. Next question is from the line of Chandramoli Mothiya from Goldman Sach. Please go ahead.
Chandramouli Muthiah
Hi, good evening and thank you for taking your questions. My first question is just around the upcoming capacity that you discussed in the prepared remarks. You mentioned that you expect mid single digit demand growth volumes through the course of the year. Interest rates have been getting cut. I just want to understand sort of in the context of that how you think about volume growth in the medium term and what is the current capacity utilization? What is the current plan in percentage terms in adding capacity over that time frame?
Shenu Agarwal
Yeah. Thank you Chandravani. So on the capacity front, you know our overall capacity is fine for I Think next two to three years we don’t need to really look at the capacity expansion. However, in certain areas we are expanding capacity. For example, the fully built bus capacity. Now what has happened in last two to three years that this. The whole bus demand is now shifting more and more towards fully built buses. Earlier people used to buy chassis from us and then they would go to external bodybuilders and get the body made. I think that was more efficient at those times.
And you know, there was also this tax advantage because the bus body had 18% tax while the chassis would have 28. But I think customers are now realizing that that is very cumbersome for them. It takes a lot of time and then they don’t get a final product with one manufacturer behind it. So I think this whole shift is coming even not just private, but also stus are now more and more interested in buying from the oem the whole bus. So while we were still expanding the capacity, you know, when we started the Lucknow plant and then we started to revive the AP plant.
But it has caught. This shift has caught us by a little bit of surprise. And now we are seriously considering enhancing the capacity of fully built buses even more. We have capacity of about 950 buses per month right now and we want to go to 1,650 buses a month including Lucknow. So we are putting those efforts in to increase that capacity. But otherwise overall, whether it is LCV or trucks, ICV or heavy duty, on capacity wise, we are fine. Overall capacity utilization is still at around 70% or so.
Chandramouli Muthiah
Got it. That’s helpful. Second question, is this around one of your competitors? There’s been a proposed acquisition of a European trucking company. So I think with ihearco in the past you have disclosed that they have been technology partners to you in prior years. Just want to understand if control of that entity changes, if there is anything to disclose in terms of technology sourcing and alternates that you have to think about.
Shenu Agarwal
No, not. I mean it’s true that we had. A partnership with Echo, but that was several decades ago. I mean many years ago. And right now there is no relationship, existing relationship for last many years of any kind. Whether it’s technology or product platform sharing or any other kind. So this recent news would not impact us in that manner. Got it.
Chandramouli Muthiah
That’s helpful. Thank you very much and all the best.
Shenu Agarwal
Thank you.
operator
Thank you. Next question is from the line of Pramod Kumar from UBS Securities. Please proceed.
Pramod Kumar
Yeah, thanks a lot for the opportunity. So my first question is just a general Reminder to us on the financials of economics of Hindu Jaliling finance and for the Ashok Lena shareholders as to what is the carrying value you have and what are the latest financials you have there in terms of financial performance and anything you can help on credit cost and quality parameters.
K.M. Balaji
Currently we actually prior to this investment of 200 crore pramod in Q4 of last financial year our holding position was about 60 rupees. Now it has gone slightly up at around 64 rupees per share and that is I would say that much better. This is our holding value.
Pramod Kumar
And bala depending on the latest quarterly financials in terms of credit costs because there’s been concern about asset quality on the CV financing side. So just any.
K.M. Balaji
Has already covered is their asset under management on is 50,000 odd crores.
Pramod Kumar
The pat number anything on the ROAS.
K. M. Balaji
Or 160 crores and their NPA is about 1.63% and their capital adequacy ratio is about 18.2% and AL shareholding is at 61.12%.
Pramod Kumar
And as a part of the process will you be offloading any equity in that entity or will you continue to be holding your stake at the same level?
K.M. Balaji
Yeah, we like to see, I mean how the swap ratio and all is going to pan out etc and I’ll also take this opportunity to just respond to this Gunjan’s question. Actually I was going through this the steps and the series of processes that are involved in it actually board approval then appointment of values then the swap ratio then intimation to RBA and the stock exchanges about the staff ratio then notice to RoC then meeting of shareholders on direction of NCLT then filing of scheme with NCLT approval by SEBI and RBI holding of extraordinary general meeting and then filing of schemes with LCLT and approval of schemes by lclt.
All these are there. So there is a series of steps which are involved in it and it is going to take more than three quarters.
Shenu Agarwal
Yeah, two to three quarters at the minimum.
K. M. Balaji
Minimum.
Pramod Kumar
Okay, fair enough. Thanks for that Balaji. And second question is related to the. Margin and the volume linkage because you did talk about in the opening remarks that you continue to see uptrend in the profitability of the company as well. And I’m just looking at the fact that last year was a record year for you with 12.8% EBITDA margin. So how should we look at that margin in context of the volume assumptions you make and the fact that even last couple of years we’ve been industry has Been hopeful that the, the volumes will see uptake, but we have not seen that. So just in case the volumes were not to see uplift, what would be the implication for your margin trajectory on a, on a YY basis? If you can just share your thoughts.
K. M. Balaji
There Pramod There are a lot of aspects you need to look at. The margin margins are not simply relatable to the volumes per se. There are many other factors which are involved in it, like the mix of the revenues. The more we do on the non CV business, the more will be the margins. And even within trucks you have various segments in trucks. If we do more on the higher tonnage vehicles, the more will be the margins on the buses side. Again. So it all depends on various factors including the business mix, including the mix, the segment mix within the businesses.
Then of course you have the commodity cost involved in it, the cost control measures which we are initiating, the recovery of, the passing on of the price increases to the customers. So all these are involved in it and it is very complex and it is very difficult to say what will be the margin outlook on a full year basis now Pramod, but directionally we.
Shenu Agarwal
Can tell you that we have at least for last three years. We do not sacrifice margins for the sake of market share. Market share, we are very clear, has to not come through short term measures. It has to come through the premiumization of the product which gives us the ability to charge better value, better price. It will have to come through our service excellence which we have started as a main, as a very large mission in January, February of this year, 18 month project. We are 6 7th month into it. But we really want to create a best in class globally benchmark service experience at our workshops and of course very, very running the company very frugally on a tight leash as far as costs are concerned, whether it is material cost or any other cost.
So I think those are our three levers other than focusing and expanding our non CV business, which is non CV non domestic business, which is also a very high margin business for us. So we are very, very focused on these three or four aspects, Pramod. And of course the numbers will tell the story later. But like I said, this year we are coming up with this high horsepower range. We are going to position it at a very premium price because we think that the product would command that price. The product has that kind of a capability to command the price.
We will be having the most powered, highest powered, highest torque, the most heavy duty aggregates. So in some of the sectors customers we think would lap onto these products and yeah, so that’s a journey towards margin improvement and market share improvement.
K. M. Balaji
Our overall aspiration, our overall aspiration would be to beat the last year margins by a handsome margin.
Pramod Kumar
Okay, that’s good to hear, Malaji. Thanks, Shira. And last one. Do you think at this point of. Time at Euro 5A2 Norms and Safety norms and every norm being thrown into the Indian civil market in the last five, 10 years, is there a significant technology arbitrage between say European markets or other Western markets and Indian markets where an alliance or acquisition could be a significant factor or what are your thoughts on that, Srinivantia? What do you think on that? Because historically there was always a worry that as India migrates and goes through the technology uplift on emission and safety and cabin safety, everything, the foreign players will have a bigger play. But we’ve not seen that much realize in terms of market share or margin.
So what are your thoughts on the journey from here on?
Shenu Agarwal
Yeah, I think it’s a long way out, you know, I mean it’s like, you know, I would say 15 to 20 years out from now maybe. I mean, but basically the difference is not so much in the technology. I think that the difference is in the sizing itself because like these trucks in Europe or America, they run at 100, 120 kilometer per hour of cruising speed. In India, the maximum speed on our highways is 80 and you know, and therefore the cruising speed would be anywhere between 45 to 55. So that is the main difference because then you need much more bigger engines.
Much more. If the engine is bigger, then you need much more heavy duty aggregates and then you build all that cost. But you can, I mean it makes sense for Europe to build that cost because their trucks can do much more trips, much more tonnage kilometer in a year because of that high cruising speed. But India I don’t think would be like that. I mean, at least in next 10 to 15 years because India would need a lot of time to upgrade its infrastructure to the levels of Europe and America.
Pramod Kumar
Thanks a lot and wish all the best. Thank you.
K. M. Balaji
Thanks Pramod.
operator
Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one next question is from the line of Raghunandan Nl from Noama Research. Please proceed.
Raghunandhan NL
Thank you. Shenu and Daladi sir, good to see continuing margin performance. My first question in Q1 for the cargo MS.3 industry, there was a fall of 4% yoy. But within that the share of about 25 ton trucks has reduced a little bit. How do you see the mix for remaining part of the year? Do you continue to see a trend where intermediate and medium commercial vehicles do better compared to heavy commercial vehicle? Or do you think the above 25 ton segment can do better in the remaining part?
Shenu Agarwal
Raghu, thank you for that question. We definitely think the heavy duty truck will do much better after Monsoon Stop because we are seeing lot of offshoots in the heavy duty segment whether it is in the mining sector or construction or even like car carriers or other things. So we are actually more optimistic this year in the second half, I mean after August, September about heavy duty than for the ICV sector. ICV of course performs better in like first quarter up to July. I mean in the first half of the year ICV always is slightly better than mhcv, than heavy duty.
But second half we think tippers will do very well. We think trailers will do very well. And we also think that multi axles will also do well.
Raghunandhan NL
Got it, thank you.
K. M. Balaji
Even in the first quarter our multiaxle vehicle growth has been quite good. It is much better than the industry growth.
Raghunandhan NL
Got it, sir. And that is also one of the reasons which has positively impacted your mix in Q1 on the different sides. You indicated that full year growth can be in double digits any color you can indicate about how large is your order book or what is the expectation in terms of how much is the potential going forward.
Shenu Agarwal
Yeah Raghu, so we are actually very. Bullish on the defense for this year and also for the next year. And the reason is that while Q1 last year we had a aberration, we had a large order that we had shipped out in Q1 last year. And therefore Q1 this year is optically looking not so good. But we have a very, very strong order pipeline. We have about 1000 crore plus of orders in hand. And we also have one tender which is the value of which is 2000 crore plus of which we are awaiting the orders. And orders would come very soon because tenders have already been won by us.
So we have a very strong pipeline. I think going forward. Actually orders are not going to be a concern for us for at least next year, year and a half. Because now we have to just execute these and get it out, get these orders out as soon as we can. So we are pushing some capacity there. You know there was a question on capacity earlier. So I had asked, I had answered about fully built buses. But defense also we are like it’s not, it doesn’t Require a mammoth capex. It just requires a little bit of a tweak here and there.
But defense capacity we are also increasing on a month, month to month basis.
Raghunandhan NL
Thanks for that sir. And can you clarify Q1? How much was the decline in defense revenue?
Shenu Agarwal
Quite a bit actually. How much? I think from 400 to 150 roughly. Yeah, yeah. 400 crores to roughly 150. We can give you the exact numbers later but it will catch up. It will catch up because last year there was a huge order of a particular vehicle that we had shipped out in Q1.
K. M. Balaji
120 versus 400.
Raghunandhan NL
Got it sir, thank you. On OM you indicated that the company is operating at healthy double digit irr. Just wanted to understand the operations we covered under the payment security mechanism for existing and the new additions.
Shenu Agarwal
Not the existing but everything that will come under come from this new PM E drive tender of 10,900 buses that would be under PM under the payment security mechanism but existing buses are mainly from. Existing orders are mainly from Tamil Nadu and Bangalore which have been very very good paymasters. So not overly concerned about the existing buses. Any new orders which will come will be covered under psa.
Raghunandhan NL
Thank you sir. Just a last question. Can you share how much is the plan for investments in FY26 given that you have done some funding for OM and also whether there will be an incremental funding on the hlfl?
K. M. Balaji
Incremental funding on hlfl? We will not be doing anything this year but if any of the other subsidiaries require any funding then we might give them a funding like take for example this switch. India is doing really well and they have become profitable now. So they might require some temporary funding to meet their working capital requirements since the cost of the buses are quite high. So keeping manufacturing them and keeping them could take time to take delivery of these vehicles. So quite a bit of money would get invested and locked up in the working capital.
So they might require temporary funds which we might give but other than that we don’t see any major investments in Q2 or Q3. We will decide it in the Q4.
Shenu Agarwal
Yeah, nothing significant other than this ohm 300 I mean even if some of the subsidies they need temporary funding we might not do it to equity route. We may do it through some other recruit.
Raghunandhan NL
Got it sir. Thank you. Thank you so much and all the best.
operator
Thank you ladies and gentlemen. That was the last question for the day. I would now like to hand the conference over to the management for the closing comments.
Shenu Agarwal
Thank you very much. As I said you know, for your trust in Ashok Leland, we would continue to improve on our volume as well as margin in the times to come, especially the second half, we hope would be better. Due to, as I said last year, the MHV industry was way down. So therefore, Q2 could also be better than Q1. But as I said, you know, we are very focused on our strategic strengths to build our strategic strengths, which we will continue to do. Thank you once again.
operator
Thank you, sir. On behalf of Access Capital, that concludes this conference. Thank you all for joining us. And you may now disconnect your lines.