Ashok Leyland Limited (NSE: ASHOKLEY) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
K.M. Balaji — Deputy Chief Financial Officer
Shenu Agarwal — Managing Director and Chief Executive Officer
Ronak Mehta
Analysts:
Unidentified Participant
Gunjan Prithiani — Analyst
Pramod Kumar — Analyst
Mukesh Sara — Analyst
Raghunandan NL — Analyst
Kapil Singh — Analyst
Amyan Prani — Analyst
Chandramouli Muthiah — Analyst
Pramod Amthe — Analyst
Rishi Vora — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Ashok Lehlan Q3FY26 earnings conference call hosted by ICICI Securities Limited. 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 this conference call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Ronak Mehta from ICICI Securities Limited. Thank you. And over to you, Mr. Ronak.
Ronak Mehta
Thank you. Good evening everyone. On behalf of ICICI Securities, I welcome you all to Q3FY26 earnings conference call of Ashok Leyland Limited. We have with us today Mr. Shenu Agarwal, Managing Director and CEO, Mr. K.M. balaji, President Finance and CFO and Investor Relations Team. I will now hand over the call to the management team for their opening remarks. Over to you saj.
Shenu Agarwal — Managing Director and Chief Executive Officer
Good evening ladies and gentlemen. Thank you for joining in and for your trust in Ashok leyland. As always, Q3 was a remarkable quarter for Ashok Leyland. Delivering superlative financial performance, setting new benchmarks in manufacturing operations and pushing boundaries in product innovation. Ashok Leland achieved its highest ever quarter three volumes revenue, ebitda, EBITDA margin, profit before tax and profit after tax. Ashok Cleland recently inaugurated one of the most modern electric vehicle manufacturing plant built from ground zero in just 14 months. Again, Ashok Leland recently launched iP4 tractor and Taurus Tipper range with industry best power and torque and many other performance and reliability upgrades.
The GST reset provided the much needed trigger for a fresh CV replacement cycle to kick in. GST rate rationalization not only lowered the prices of CV significantly but also created a major fillip in consumption and therefore in freight demand. It elevated sentiments of both retail and bulk buyers resulting in strong volume growth in the last three months consecutively in Q3 the domestic MHCV truck industry volume grew 24% with overall MHCV industry growing by 21%. The LCV industry volume grew by 23%. The momentum has continued in January 26th which augurs well for a strong FY26 finish.
Ashok Lillian domestic MSCV volume growth for the quarter was at 23.4% YoY and was better than the industry growth on YTD nine month period as well. Ashok Lillian growth at 9.8% YoY was better than the industry growth thus resulting in market share gains. The MSCV domestic market share on YTT basis was 30.9%, a gain of 60 basis points YoY this is without defense and EVs for buses. Domestic MHCV truck volume for Q3 was at 27,615 units and MHCV bus volume was at 5,314 units. Ashok Leland Domestic LCV volume for quarter three was at 20,518 units higher by 30% year on year beating industry growth.
LCV Wahan market share for Q3 was at 12.1% with a gain of 70 basis points YoY for the nine month period domestic LCV market share stood at 12.7% with a gain of 40 basis points YoY. Our exports volume for Q3 at 4,965 units was higher by 20% YoY for nine month period exports volume was higher by 30%. The growth was broad based with double digit volume growth across all our home markets outside India which are GCC, Africa and sarcastic. Our non CV businesses also grew as per plan. Aftermarket revenues for Q3 was higher 10% year on year.
Revenue from power solutions business was higher by 45% year on year and revenue from defense business was higher by 84% year on year. Defense order book and Tender Wind pipeline remained strong. We are steadfastly working on product innovation for differentiation and premiumization. Ashok Leyland recently launched the new range of heavy duty trucks, Hippo tractors and Taurus Tippers with industry based power and torque. These products with superior powertrain of 320hp and 360hp and heavy duty driveline aggregates will deliver industry best uptime TAT and TCO in the multiaxle vehicle category also we launched new trucks with improved powertrain of 280 horsepower along with superior aggregates for better TAT and productivity.
In the LCV segment we launched new 4.1 ton Barados with industry best payload capacity. We also launched a new 100kmph Barados Torphenics for our IO markets and we extended load span options up to 10ft 7 inches thus expanding our product coverage in the LCV segment. Shortly we will enter the growing biofuel segment as well. Our product pipeline remains strong with launch of many more new products planned in the next six months. Months we continue to leverage our strong non diesel portfolio. Two models of light electric trucks, three nodes of MHCV electric trucks and several models and variants of electric buses are already available commercially.
We are also ready with products on other greener technologies such as cng, LNG and even hydrogen. With inauguration of the new Lucknow plant and continued ramp up of our other bus plants, we shall soon REACH bus body building capacity of 20,000 numbers per year. For strengthening our service reach, we added 75 MHCV touchpoints and 77 LCV touchpoints during the nine month period. With 45% of the MHCV touchpoint additions in the north and northeast. At the end of Q3FY26 Ashok Leyland network has a total of 2,041 touchpoints, 1126 for MHCV and 915 for LCV in international markets, we expanded our network to four new territories.
Quite recently Ashok Leland signed a MoU with PT Pindad of Indonesia, a state owned entity in the defense sector for joint development of electric buses and defense vehicles for the Indonesian market. With distributor partners already lined up in Malaysia and Philippines, we are in the process of establishing ASEAN as our fourth home market outside India. Now coming to financials, Ashok Laland achieved All time High Quarter 3 Revenue EBITDA, EBITDA Margin, PBT and Pattern Revenue for Q3 was at 11534crore higher by 21.7% on year. On year basis EBITDA was at 1535crores higher by 26.7% year on year.
EBITDA margin for the quarter was at 13.3% higher by 50 basis points against Q3 of last year. PBT before exceptional items was at 1373 crores higher 38% on year. On year basis PAT before exceptional item for Q3 was at 1,104 crores higher by 45% year on year. During the quarter on account of the new labor code There was a one time charge of Rupees 308 crores. Material cost as a percentage of revenue for Q3 was 72.2% higher by 70 basis points YoY and 100 basis points sequentially. This gross margin compression was on account of product mix and some escalations in non ferrous commodities.
With PGM copper and aluminum cost saving efforts continue with the same rigor while we are pushing for improvement in price realizations and for recovering commodity cost increases. CAPEX for the quarter was at rupees 187 crore and cumulatively rupees 844 crores for the nine month period. Investments in subsidiaries in Q3 and for the nine month period was rupees 16 crores. Our cash position net of debt has got stronger. We had net cash of rupees 2,619 crores at the end of the quarter an increase of more than 1660 crores on year on year basis coming to our subsidies.
Switch India continues to do well. For 9 month period switch India sold 850 buses and about 1200 ELCVs with positive EBITDA and positive PAT. Current order book stands at 1350 units. Recently switch delivered over 240 buses for deployment in the national capital. Switch has now also started exports with the first batch of vehicles supplied to Mauritius and one order of 45 buses obtained from Bhutan. Switch India is progressing well on its target of becoming free Cash flow positive by FY27OM, our EMASS subsidiary is is now operating more than 1400 electric buses, adding more than 300 buses to the operating fleet in Q3.
All the GCC projects under execution by OM are at healthy double digit IRR. Hinduja Lilian Finance standalone AUM was at rupees 56,470 crores higher 18% yoy and Hinduja Housing Finance AUM was at 15,454 crores higher 16% yoy. Total PAT for the finance subsidiaries for quarter three was at 220 crores. Reverse merger of HLF with NDL Ventures had some initial delays but now with all the necessary approvals in place, the process is being followed for a final closure. We remain focused on our ESG commitments. Our Dow Jones Sustainability Indexes ESG score has improved significantly and we are now in global top 2% of the IEQ which is Industrial, Engineering and electrical equipment companies.
In our commitment towards Re 100 we achieved 80% Re status against 69% in FY25 with our Tamil Nadu plants now at 94%. Our road to School and Road to Livelihood programs continue to grow, extending their reach to about 6.1 lakh students. Now in summary, we believe we have progressed reasonably well in the nine month period on all our focus areas which are MSCV and lcv, market share, growth of non CV and IO businesses, product innovation, service reach, profitability and sustainability. We believe that current environment is extremely conducive to CV volume growth with favorable macros, pro growth FY27 union budget just concluded, India EU FTA and resolution of the India US Trade Tariff deadlock.
On the back of these we remain confident of posting good volume growth in the coming quarters. Thank you once again for your continued trust in Ashok Leland. I now hand it over to the moderator for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you May press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Gunjan Prithiani from Bank of America. Please go ahead.
Gunjan Prithiani
Thanks for taking my question. My first question is on the industry growth outlook. I think you did sound pretty confident and positive on the growth outlook. Can you just share more insights on how should we think about the sustainable growth getting into fiscal 27? I mean, I’m sure there is an element of bunching up that’s happening post GST and maybe just a little bit more elaboration on the point that you made that we are seeing replacement demand come through to the industry, both from small as well as the bulk buyers. Is it that we’re starting to see the larger set of truck operators also come back to the market after the gst? You know, this whole clarity has settled in as to which rig they will go forward with? Just some thoughts around that.
Shenu Agarwal
Yeah, Gunjan, thank you very much for the question. You know, when GST was announced, you know, the first movers in the industry was actually the retail buyers, not the bulk buyers. As you rightly said. Bulk buyers have a little bit of a more complex equation to understand because of the GST reduction. And therefore in November and December, largely we see the. We saw the growth coming from retail buyers more than bulk buyers. Now in January, we have seen that even many bulk buyers are now coming forward and they are not just bulk buying for their current needs, but also they are even projecting their purchasing for the next many quarters, like three or four quarters, you know.
So we think that sentiment is very strong right now. People are seeing the value, we are seeing that freight demand is going up. So it’s not just about the lowering of the prices because of the tax cut. It’s also because of the growth in the consumption economy and more freight demand. We are also actually seeing slight increase in the freight rates also. It’s a very kind of a unique situation when both the demand and the rates are going up in the market, which is building up quite a positive sentiment. Even initially. We were a little bit also apprehensive whether the bulk buyers would move forward because of all the complications relating to the ITCs and the cash flows, et cetera.
But now in January, we are much more optimistic about the future prospects having seen the bulk buyers also moving out and actually projecting their demand for next many months now. So we are at this point in time very confident that this could be start of a new replacement cycle in the CV industry. You know, we had always been talking about the aging fleet and how the average age has gone up from seven, seven and a half to ten, ten and a half. And we were just hoping and waiting for a trigger that could provide, you know, the replacement cycle to kick in.
And we do think this could be the trigger.
Gunjan Prithiani
Okay, so that’s actually quite encouraging to hear. Maybe just like a quick follow up on that, given that we didn’t really see a sharp volatility in the cycle this time around. I mean, on the way down also it wasn’t like a steep down and hence the question that, you know, how do we think about the growth for the next year or two years? Should we sort of also assume the upcycle will be modest? At least the recent numbers don’t say that it’s modest. So I’m just trying to get a sense that is this a number that we extrapolate or we temper down going into a fiscal 27, given, you know, the down cycle wasn’t.
Wasn’t that steep.
Shenu Agarwal
Yeah. Gunjan, you have to just consider this in two different ways. I mean, one is like this year also we are saying specifically for the automotive industry that is in it’s a year of two halves, April to October 1st seven months and the balance five. Right. Now next year also we have to just keep in mind that April to October, which was a low base from last year, we should see really phenomenal growth. Although I don’t have numbers to give you right now. Exactly. Maybe that we can come up with during the end of the fiscal.
But in the second half, which is basically November, December, last five months, there would be a high base also. Right. So but overall we still believe that the industry is going to stay strong next year. Balaji, you have something to add?
K.M. Balaji
Yeah, actually Gunjan, when you are talking about the past thing, no, it appeared to be stable still. There was a huge movement which was happening between truck and bus. Truck. We all know there was a shortfall. There was a lullness for 2, 3 years. It was about 3, 20,000 and in last year it came down to 3, 13,000. There was a fall, but it was more than compensated by the surge in the volume on the bus side. Bus side went up and then it contributed. So there was increase on one side and decrease on another side.
So I mean, we didn’t realize the fluctuation.
Gunjan Prithiani
Got it. I have you on the commodity side. Can you just sort of share what was the headwind we saw in this Quarter, how do we think about the metal inflation that we’re seeing, particularly on the precious metal side? I mean, what was the impact in quarter three, what do we see in quarter four and what sort of pricing action we have taken to sort of mitigate that?
K.M. Balaji
Yeah, actually Q3 we saw an increase in PGM, copper and aluminium. This actually Shenu touched on his opening remarks. We saw that although steel price was benign and there was not much of movement on the steel price, but all these contributed to a sizeable increase. Adding to this was the change in the mix for us. We all know the truck revenue went from about 50% to 55% overall. This also added to this drop in the gross profit. You would have seen the ASP going up, but these factors contributed to the drop in the gross profit.
So having looked at the gross profit, we will come back to the metal cost side. So we see this kind of trend, I mean, is happening and we have started taking increasing the recovery from the customer, not by way of like an increase in the price, by way of increasing in the price circular, etc. But by way of reduction and the discounts which we have started doing. And we’ll have to see how, wait and see as to how this is going to unfold in the coming two months. We have been successful in getting some price increase in Jan.
Gunjan Prithiani
Can you quantify the commodity impact what reflected in Q3 and maybe if any calculations you have.
K.M. Balaji
For it was roughly 50 basis points? Kunjan, on the Q3 we suffered 50 basis points because of this increase and we are trying to recover it from the customer by way of increasing the prices by about 60 more than 60 basis points, including the margins.
Gunjan Prithiani
Okay, thank you so much.
Shenu Agarwal
Just to add to that, there is a little bit of a challenge that we are facing, we have been facing for the last three months or so. Even like Balaji said, the mix is also a little bit unfavorable in quarter three and largely because of, you know, like I said, you know, the initial momentum from the industry after GST was from the retail side. And you know, there are more retail participation in the ICV and the LCV side of the industry than in the heavy duty side. Right. And therefore when those that growth started appearing, the ICV really went up, you know, as a contribution to the overall sale, not just for us, but for the industry as well.
And now since in January we are saying even the bulk buyers, the heavy duty truck buyers, the tipper MAV tractor trailer segment is also coming up with the bulk buyers, then this trend should get neutralized is what we are hoping in the next few months. But yes, these are the two challenges the industry is facing just on the price hike. Also, you know, there was a general notion that since GST has really led to strong growth in the industry momentum, this may not be the right time to increase the prices. Right. But that I would say is kind of temporary because if commodity pressure continues to build up, then industry would go or should go for a price hike like a more bigger price hike in future.
Gunjan Prithiani
Thank you so much.
operator
Thank you. The next question is from the line of Pramod Kumar from UBS Securities. Please go ahead.
Pramod Kumar
Thanks a lot for the opportunity. Can you hear me, sir?
Shenu Agarwal
Very well.
Pramod Kumar
Yeah. Thank you. And congrats on good set number. My question is on the profitability session. We understand the volumes are expected to be good, but commodity price also surging. And you are for example the next quarter basis 15, which is already the kind of long term margin guidance what you gave. So how should one think about the margins in this particular period? It could be a bit of a deception because of commodity which ideally normalize. But how should one look at margins while building in a mid single digit growth for the industry? If you can just help us understand that bit will be very useful.
Shenu Agarwal
Yes, like I said, there are three elements of it. I mean basically overall at the margin level, profitability level, one is the price, the other is a mix and the third is a commodity. And of course the fourth element is what we can do internally to further strengthen our efforts on the cost savings. So all these four will play pricing. I already said that there was a notion that we should not increase the prices so soon after the announcement of the GST cut. And therefore most of the players, I think even in the larger automotive industry avoided any significant price hikes.
But this does not mean that ability to take better price is not there. I think with the rise in demand and the rise in freight rates and on the back of the new products that we have just launched, I think there is a lot of scope of getting better prices from the, from the customer. So I would say it is a temporary concern, but it is nothing fundamental in nature. The second is like I said, mix. So initially, November, December, there was a huge surge in the ICV contribution in the overall truck industry. I mean, you know, I mean it reached close to like 30% if I remember correctly.
And it always used to be like 22 to 24%. So there was a big shift there. And I’ve already explained the reason of it. This is also Nothing, which is fundamental in nature. It’s not like something has happened in last three months that ICV would be at 30% going forward. Going forward it has to come down to 23, 24%. Now whether it takes one month or two months, three months, hard to say. It really depends on the mix of the retail and the bulk buying that happens. But it should not take that long to get back to a favorable mix.
And the third is commodity. I mean commodity is not so much in our control, but like I said, there are possibilities to hedge it off with better price increases in the future. And also we are, I mean definitely strengthening our own efforts to get to higher cost savings. You know, not just material cost, but all other costs. And whenever you launch a new set of products, you know, the opportunity to save cost. Once again a new opportunity emerges. Because whenever you design something for the first time, you sometimes tend to over design it. And with some experience in the field, then you have another opportunity of value engineering, etc.
So we are looking at all of those things and we will try to see how we manage this temporary situation in a better way.
Pramod Kumar
Second question for Balaji. First is on the steel side, how are the contracts normally kind of structured? The duration and the pricing. And also the second bit is on the staff cost. We see sequentially the staff cost came down, which normally shouldn’t be the case given that production has gone higher and there’s generally inflation in salaries. So we can just throw some light on these two points. Valerie. Thank you.
K.M. Balaji
The first question. I didn’t get your first question. Steel contracts, actually they are all half yearly contracts which is done. And what happens is that whenever the markets, the spot rates changes and the market changes, then either the purchaser or the seller, they approach the other party for the reduction or the increase as the case may be. These are all half yearly contracts. And on the staff cost side, I think we had to tone down our variable performance pay with reference to the the overall full year targets and achievements. That’s why, I mean there is no one off involved in it.
But we are in line with the overall full year targets for the company.
Pramod Kumar
Can you quantify that?
K.M. Balaji
If you don’t mind, A quantification will be. There will be approximately 20 crores which would have got reduced.
Pramod Kumar
Okay, but so no 4Q should normalize to revert back to a normalized hundred. Thanks a lot. Thank you. Thank you, Vishal. Thank you.
K.M. Balaji
I need to confirm that there is no one off involved in it. Again, for everybody’s benefit, I would like to Tell you confirm that there is no one off except for this wage code.308 crores in that and the component.
Pramod Kumar
Of that which pertains to 3Q has already been accounted for. 32 results. There would be a normal bump up in your 3Q because of wage code as well. Right?
Shenu Agarwal
Yes, yes, yes, thank you, thank you.
Pramod Kumar
I’ll call back in the queue. Thank you.
operator
The next question is from the line of Mukesh Sara from Evan Dispark. Please go ahead.
Mukesh Sara
Yes sir. Good evening and thank you for the opportunity. My first question is again on the outlook and the CV cycle. What we have seen so far is we’ve kind of seen a growth in the ICVs and the slightly lower tonnage vehicles, but not so much in the higher tonnage vehicles. Typically at the start of the cycle, probably we see a higher growth in the larger tonnage vehicles, but we haven’t seen it so far.
K.M. Balaji
So if you could kind of help.
Mukesh Sara
Us understand this, you know, in terms of beginning of the upcycle. But the mix isn’t kind of still seeing that improvement.
Shenu Agarwal
Yeah, Mukesh, like I just explained, you know, November and December we saw higher uptake from the retail segment. But in January now we are seeing a much better traction coming from bulk buying also. And normally bulk buying is more towards bulk, more towards the heavy duty and retail buying is a little bit more skewed towards the low and the middle segments. Right. So this should, like I said, this should correct itself.
K.M. Balaji
And other than, I mean just the.
Shenu Agarwal
GST effect, I think the kind of momentum we are seeing on the infrastructure side, construction side is also going to play quite a lot in the next few months until the monsoon arrives. And that will definitely give a lot of fillip to the heavy duty segments of tippers and multiaxles.
K.M. Balaji
So we are not overly worried.
Shenu Agarwal
I really think it is a temporary effect, just mainly from November, December, partially in January and it should subside because like I said, there is no fundamental change in the market dynamics whether it is ICV or heavy duty. So it is just the instant reaction comes faster from the retail segment than the bulk buyers.
K.M. Balaji
I also need to correct your impression, Mukesh on even the MAV segment has registered a growth for Q3. No. Compared to the same period last year, there has been a growth of 34%. Okay. It is not only the ICV which has grown, even the higher tonnage segment side like the tipper and the mav, it has grown, especially mav.
Shenu Agarwal
Going also tells you that because MAV is also a very high content or A high contribution of the retail segment. That clarifies the point that wherever the retail segment was higher, you know, those two segments, they generally kind of showed an early jump, not to say that rest of the segments would not follow up.
Mukesh Sara
Got it, got it. And secondly, slightly on a longer term, we’re seeing the notification is out that next year we’ll have the ADAS equipment kind of getting mandatory in trucks, buses. And in general we’re seeing over the years a lot more regulations coming into place, be it emissions, be it driver comfort or obviously road safety. I mean, do you see this kind of leading to increase in the price of vehicles, say over the next three, four years? And how is the logistics industry, the transporters in general, how have they evolved? Are they, are they kind of in the situation to pay more for the vehicles? How do you see this and how are we prepared for this more and more regulations to kind of come in?
Shenu Agarwal
Yeah, Mukesh. So, I mean, you know, I mean, we have, I mean some of us who follow the CV industry for a long time have lot of, you know, ideas about how this industry operates. But I think if you recall the last big regulation that was there was on the air conditioning of the truck, right? And we were all quite worried that whether industry will be able to absorb this cost or there will be a reduction in the growth levels, et cetera. But I mean, you know, the industry has so much welcomed this whole idea, you know, that the industry itself, we believe has changed a lot actually in last few years.
People, because of the shortage of the driver, because of other factors, you know, people are giving lot more importance on things like comfort, safety, you know, and things like this. And AC was a brilliant example of this. And I do think that even with ADAs, you know, which is largely safety oriented regulation, you know, you would see that people will see value in it, you know, when their accidents can be reduced, when their collisions can be avoided, you know, when there would be lesser fatalities, lesser damage to the goods that they are carrying, you know, so it takes a little bit of a time sometime in adopting to these new technologies or practices, but I think the whole industry dynamics have really changed in our country.
People are putting lot more, I mean, mileage, reliability, etc. Is important and will continue to be important. Right. But comfort and safety and other things are also playing a big role now.
K.M. Balaji
Quarter on quarter also, Mukesh. Quarter on quarter also there has been a good growth on the tipper segment. Sequentially there has been a huge growth on the tippers and similarly there has Been a huge growth on multi axle vehicle and ICVS in parallel. And similarly the growth in haulage and tractor has been quite uniform. So if you look at sequentially that is how all this have contributed to a good surge on the margin. Of course that is partially offset by this commodity cost movements which has resulted in a 5060 basis points improvement sequentially in the market.
Mukesh Sara
Got it sir, got it. Thank you. Thank you so much for this clarification. I’ll get back in the queue.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference please limit your questions to two per participant. The next question is from the line of Raghunandan Nl from Nirvama Research. Please go ahead.
Raghunandan NL
Good evening sir. Thank you. And congratulations on strong ripple. Firstly on the fleet age. It was at a historical high of 10 years. Given that there is better freight availability, better infrastructure spending and there is a very big advantage of using the newer trucks due to better uptime and remote diagnostics. How do you see this age, blended age moving over the next two, three years? Do you think it would come down and replacement demand will be a big tender in sustaining the cycle?
Shenu Agarwal
Yeah. Thank you Raghu first of all for your kind words and yeah, I mean you are right. I mean you know there is only one way this whole aging can move which is to go back to the normal. Because. Because I mean this ten year, ten and a half year is really not sustainable for our industry. And therefore you know, if GST and other macroeconomic factors are going to or have triggered already triggered a replacement cycle, I think we’ll have very good times in the future for this industry also. I think other than this also there is a lot of consideration going on especially for some of the metro cities etc.
From the government to look at scrapping once again because pollution has really become a big problem for the whole country, specifically for the larger cities. And you know, so some of these policies, I think if they come in, you know, then they can provide really additional triggers to our market. I mean, I don’t know but I mean for this age to go back down to even eight years from 10.5 right now would take a few years. Right. So until then there is actually a potential demand in the market that we can see now. How it will dovetail into numbers, you know, is of course we have to watch.
Raghunandan NL
Thank you sir. Can you also speak about your efforts and potential that you see in the non south markets? How you can further gain market share, how you can Replicate the success which you have had historically in the south market.
Shenu Agarwal
Actually, Raghu, I mean thanks for asking that because that has been one of our big focus areas and we have done substantially well. I mean in terms of increasing our penetration in Northeast and Center. You know our. I mean until about three or four years ago, I remember our market share in north used to be like 15% and now we are sitting more than 25% with an average market share of 31% overall India. So we are now, I mean no longer of that regional company or a zonal company. We are actually now a national brand in that respect.
I think other than east where we have to do a little bit of more work. I think we have become very strong investors. East, west, center and North. And I mean there is still some headroom. I agree with you. There is still some headroom because 25% is probably not what we want. But we are addressing those challenges. For example, now we have tied up with TVS group for our distribution in the NCR area. Now they are coming up with 13 outlets which will give us a huge representation. And TVS is known for their excellent after sales surveys, their professionalism in dealerships.
You know, they have been our partner in south for five or six decades. So that relationship is there, that understanding of the market is there. You know, the reputation of the name is there. So I think by taking such steps I would say that you know we should be equally strong or at least we should have, you know, 30% market share in the zones where we were at some point in time like 15, 18% and that should happen very soon. Most of the actions we have taken already a few actions are left which will be completed in the next few quarters.
K.M. Balaji
Thank you very much sir. Lastly on Hindu chal election. Sorry to interrupt. Mr. Raghu, may we request you return to the question queue for a follow up question?
Raghunandan NL
Sure. Thank you so much.
operator
Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead.
Kapil Singh
Good evening sir. Congratulations on the strong performance. Very tight cost control visible there. My first question is on capacities. How are you placed on capacities for MSCBs and LCVs? Do you need to trigger CAPEX to enhance capacities? Now there is potential for upcycle and both you can mention both from Ashok length capacity and also from a vendor capacity point of view. How are things placed? Will you be able to service demand or is there some supply challenge that is coming up?
K.M. Balaji
Yes, a couple.
Shenu Agarwal
Excellent question actually in the circumstances because you guys and we were both surprised by this very Very strong momentum that has shaped up in last three months. But at this point in time we do not have an overall constraint on the capacity side. Even with a strong positive forecast. If we undertake or assume for the next year FY27 we should be more or less fine in terms of the overall capacity in any which segment that we operate in. There would be some challenges in some smaller niche areas. You know, for example, there could be a challenge with one particular machining setup or there could be a challenge with one particular supplier where we may have to, where the supplier may have to invest or we may have to invest in another set of tooling or we may have to ask supplier to set up another shop for us, you know, so those kind of things would be there.
The capex requirement would not be humongous there, you know, but it would be bits and pieces like we have been doing in the past.
K.M. Balaji
There may be one or two areas.
Shenu Agarwal
Which where we may have to invest, let us say 50 to 100 crores, you know, kind of amount but those would be limited to only one or two areas.
K.M. Balaji
So I think like we have been.
Shenu Agarwal
Telling you that we don’t see any major investment in capacity expansion in the next two to three years.
Kapil Singh
Can you tell us what is your capacity in MHCV and LCVs currently?
K.M. Balaji
Kapil will not be able to disclose the capacities. Kapil.
Kapil Singh
Okay. And just sorry to interrupt.
operator
Mr. Kaplan, may we request you return to the question queue for a follow up question. Thank you. The next question is from the line of Amyan Prani from JP Morgan. Please go ahead. Mr. Pirani, your line has been unmuted. Please go ahead with your question.
Amyan Prani
Am I audible?
K.M. Balaji
Yes.
Amyan Prani
Yes. Hi. Hi. Thanks for the question. Most of the questions have been answered, you know, but there was this news today regarding OHM and I don’t know, you know if you can comment on news flow as of now. But just for our understanding since you know the news flow talks about, you know, some kind of evaluation. Can you give us a sense as. To what are the kind of investments that OHM may require but what you have already thought about and what are the like, you know, some financial metrics that you can share like revenue or that for the business and what kind of investments you have already thought about which may be required in the next couple of years?
Shenu Agarwal
Yeah, thank you for that question. I mean we are very focused, focused on building this whole business model around emass, not just for buses but also for trucks at some point in time. And we think our whole industry is going to shift to newer business models in future. And therefore we have really created this entity to take care of those opportunities. As far as the investment is concerned, we have already invested 300 crores in OM. We have also earmarked another 300 crore crores for OM as and when needed. And like we have, I think told you before, beyond this 600 crores we would be open at looking at other fundraising options.
Yeah, so I mean that is where we are. And we have like we have been maintaining that some of these GCC contracts that are being won by some of the players in the market are really not viable. And we have our certain minimum thresholds as far as these GCC contracts are concerned. And if we find that we can play a role in contributing to this kind of an industry with certain minimum threshold margins, we do go and get these contracts, but otherwise we don’t. Right. So it really depends on how this opportunity will emerge for us.
But like I said, as far as investment is concerned, 600 crores we have earmarked of which 300 we have already put in. And beyond that we will look at certain fundraising from external sources.
K.M. Balaji
And for the year to date that is still Q3. Shenu has already covered this in his opening statement. Our investment is at 16 crores, 1.6 crores only. And when we look at the requirement of the group companies including OM and the other group companies like the Induja Leyland Finance and Induja Housing Finance and then we may decide on the capital requirement, capital infusion in those companies. Similarly, we will also look at the possibility of repayment of some of the loans which have been acquired by the Optare outside India. So we will also look at that.
So it all depends on the requirement as well as the cash situation. And you would have also noted the cash position as of 31st December, which is at 2006, 600 crores positive.
Amyan Prani
Thanks. Thanks, that’s very helpful. I’ll come back in the queue.
operator
Thank you. The next question is from the line of Chandra Molimutiha from Goldman Sachs. Please go ahead.
Chandramouli Muthiah
Hi, good evening and thank you for taking my questions. My first question is just around the non truck business mix. So I think over the past three to six months we’ve seen meaningful pickup in the truck business which has added to profitability and growth for the broader business. But just trying to understand, you did mention in the prepared remarks that you have won some defense orders. So in this faster growth period for trucks, just want to understand if you think the non truck business Components can also grow equally as fast and maintain that mix in the way you sort of plan for your margins over the next 12 months.
K.M. Balaji
It is happening. Chandra Moli first of all, thanks for your question. It is happening. See if you look at the truck portion of the overall revenue when you compare it to the same period last year it is around 55%. Current year also 55% last year 55%. But if you look at the proportion of the businesses like IO which was around 6% now it has grown to 8%. So I mean it is happening these kind of shift though it is happening but in select pockets it’s happening. That’s why you are seeing the margin going up when you compare it to the same quarter of the last year from 12.8 to 13.3.
It is all because of the efficient management of the mix also, the business wise revenue mix also.
Shenu Agarwal
Yeah, like I said, even with the strong growth in the truck segment, our power solutions business was 45% up in Q3 yoy and our defense business is 84% up yoy. Right. So I think, I mean while I agree that truck is going through a strong momentum but the other businesses are even stronger right now.
K.M. Balaji
Exactly. From 1% defense share of revenue has gone to 1 and half percent and power solution business the share has gone from 3 to 3 and a half. 3.6%.
Chandramouli Muthiah
Got it. That’s very helpful. My second question is just around the dedicated rail freight corridor, northwest corridor extension to Kerala Nehru Port. So I think that was earlier planned to be sort of a March quarter event. Now it looks like it’s getting pushed out. So just want to understand. You mentioned that this could be a year of two halves where you know April to October is very favorable base and strong momentum post GST and we’ll have to see maybe what happens after that. So the latest on the dedicated rail freight corridor, from the way you are observing it, is this likely to happen in CY26 on the JMPD extension and how do you think about that event and what are the potential options available to Ashok in terms of offsetting whatever impact there could be from that?
K.M. Balaji
See the deadline for the completion of the last leg of 100 km of this western dedicated freight corridor has been extended multiple times and we would wait for the actual commencement of the operations. However, this WDFC is operational by about 95%. It is complete and has been operational for more than a year. With respect to its impact on this tiv, we have said this earlier also that DFC do not address the Full connectivity in the sense that the last mile connectivity it is not there though it could have some impact on the specific may be on the tractor trailer volumes.
Post commencement of the full operations, there will be positive impact on the volumes of ICVs and the LCVs required for the last mile connectivity. Having said that, we expect the impact to be very, very minimal. Even on the tractor trailer side, it will be very minimal over the next two to three years.
Chandramouli Muthiah
All right, that’s very helpful. Thank you very much and all the best.
operator
Thank you. The next question is from the line of Pramodamte from Incred. Please go ahead.
Pramod Amthe
Yeah, hi, thanks for taking my question. You want to check your product profile considering the start of a new upcycle as you are indicating, do you need to take into account the any product gaps you want to address or the type of demand which is coming up? You need to advance new product launches as compared to earlier plan?
Shenu Agarwal
Yeah, we are taking some actions. I mean, irrespective of the current situation, we are taking some actions as to how we can increase the agility of our new product development process. We are actually working on a. We have actually institutionalized digital tool now to track daily activities, etc. Which actually creates a lot of collaboration within the company on new product development activities which we think will bring lot of transparency, lot of visibility, lot of ownership and lot of priority. Also in terms of which projects we want to speed up and which projects we may want to kind of pause on or run at a slower speed.
So those actions are in place. But like I said, our product overall product development pipeline is very, very strong. You would see like a big launch we have done now with Hippo and Taurus. And also we have come up with this 4.1 ton Barados with the best in class payload. You will see many such launches happening in the future, even in this calendar year. And also our overall product roadmap is quite clear. Product and technology roadmap. So what we want to do, how do we want to address our white spaces in the LCV segment? How do we want to increase our LCV coverage to 50%? From 50% to 80%? You know, so those are already being.
All those actions are already being undertaken.
Pramod Amthe
Thanks for that answer. And the second one is with regard to subsidy investments, they seems to be pretty low compared to your own guidance or historical trends. What is. Are the subsidies performing better and hence their ask rate is low or you feel last quarter you need to finish off the investment?
K.M. Balaji
No, no, actually Pramod, the subsidiaries are doing fine. I mean many of the subsidies are doing fine and you know that we have also, I mean got out of this assembly facility from the Switch UK last year which was the main cash guzzler. So the rest of the companies are all doing fine and they require capital infusion. We will do it as and when it is required. As I indicated to you, there could be some requirement of the capital on Om which Shenu touched upon. 300 plus another 300 we have not yet released. We look for the requirement and then we will release in our expectation we may release about 100, 150 crores on the OM front.
And on the requirement for this Hinduja Leyland Finance as well as this Hinduja all Swing Finance, we will appropriately decide depending on the requirement because those businesses are also growing significantly. You would have noticed the AUM growth significantly around 20% or so. So we would like to invest there also. And of course the third one, as I told you, there are certain unfinished loans which are there outside India where we would like to finish off those loans also especially relating to the Switch uk we will do that also which we disclosed in the earlier conference call.
So that is all we will do. Promote. No surprise.
Shenu Agarwal
Yeah, no surprises. We have already earmarked this money, you know, for the reasons that Balaji just described. So they will happen on in the right time when needed. But I would say most of the subsidies are doing well. I don’t foresee any huge investments or significant investments for loss funding. Now having dealt with Switch UK already. So yeah, so mostly whatever funding happens other than that Switch UK loan would be for the growth of these subsidiaries.
Pramod Amthe
Sure. Thanks.
K.M. Balaji
The Switch UK loan we carry and we can pay in a bullet installment that is in FY29 we can repay. But we would also looking at a plan of repaying it in installments also in two or three installments.
Pramod Amthe
Sure. Thanks.
operator
Thank you. The next question is from the line of Rishi Vora from Kotak Securities. Please go ahead.
Rishi Vora
Yeah, thank you. And congratulations on good set of numbers. If I just look at the previous up cycles right of 15, 16, 20 to 23, at least at that time the tonnage growth had outpaced the volume growth for the industry. And if I look at third quarter of FY26 again, it’s too little data. But at least it seems like the tonnage growth has actually underperformed the volume growth. So this time around, do you expect that the upcycle would be little different from what we had seen at least in terms of quality of growth or do you expect it to kind of converge and then the tonnage growth outpaces over the coming quarters.
K.M. Balaji
No.
Shenu Agarwal
So Rishi, I mean it’s a very nice question, but listen, this tonnage growth would continue to happen at, at a regular pace, you know, but that pace would not be very, very strong. Right. So but also you should keep one thing in mind, you know, because probably it has not happened so far. I don’t think it doesn’t mean that it will not happen in the future, that lower and middle level segments would also have a long term, very solid long term potential because of the last mile delivery, because of the E commerce, et cetera. Those really have a long term potential.
So I think tonnage will keep going up and down as the various sectors perform. But the key fact that we are looking at is right now, is this replacement cycle, is this a fresh replacement cycle that has kicked in or is this just a short term Filip from the gst? Now three months have already gone from February also we are seeing very strong momentum on the ground, right? I mean in terms of leads and inquiries and you know, the cases that are locked in with the banks and NBFCs, etc. So now it seems like after three and a half, four months, it seems it is something that is going to sustain for a longer period.
Rishi Vora
Understood. And my second question is just on this average age, right, which is roughly about 10 years now with better quality of roads, better quality of vehicles, is it necessary that the average age of the vehicles need to come down? Or you know, this is like a new norm, nine to 10 years for the industry where, you know, the fleet operators are okay with this kind of age.
Shenu Agarwal
Again, great question. I mean, you know, average is always sometimes and most of the times can be very misleading. I think what we should look at is how many vehicles we have now as compared to in the past that are more than 15 years, that are more than 12 years. Also we should look at how many vehicles we have now which are still on BS2, BS3, BS4 regiments. You know, that is a more, that is a better data point to look at to see whether this is sustainable or not. So when you look into those details, and I think Balaji has shared those numbers with you in the past also if you want those numbers, we have those ready.
We can share these with you separately. But when you look at those numbers, I think you will realize that this has to change.
Rishi Vora
Understood. Thank you sir, and all the best.
operator
Thank you. The next question is from the line of Prashant Kothari from Picted Please go ahead.
Unidentified Participant
Just one question for me. On the financing business, I see from. Segmental results that the profits are down y basis. Just comment on what is happening please. Pardon? We are not able to clear you clearly. Hear you. Prashant. Hi. Is it any better?
K.M. Balaji
Yeah, now it is better.
Unidentified Participant
Okay. I just wanted to understand. On the financing business I see that the segmental results the profits are down on an iron year on basis. Can you just explain what is happening there please?
K.M. Balaji
As such. Just give us a minute. He’s just picking up some data. Actually it has gone up. Prashant, when you look at the the quarter on same quarter, third quarter versus third quarter of last year, it does. The profits have gone up. It has gone up from about 107, 108 crores to 130 crores.
Unidentified Participant
I’m sorry, I am looking at segmental results. Financial services. Last year Same quarter was 231crores. And this is.
K.M. Balaji
I mean, I don’t know. I mean which segment you are looking at. I will take that question separately and then I’ll clarify to you. But as such there has only been an increase.
Unidentified Participant
All right. Do you disclose that somewhere else or is it just in with your mis.
K.M. Balaji
Oh no, it will be as part of the financials. I will just take your question. I mean where from you have taken that number. I will understand. Then I will respond to that.
Unidentified Participant
All right.
K.M. Balaji
Okay.
Unidentified Participant
Thank you.
Shenu Agarwal
Okay, thanks.
operator
Thank you. Ladies and gentlemen. Due to time constraints, that was the last question for the day. And I now hand the conference over to the management for closing comments.
Shenu Agarwal
Thank you. Thank you ladies and gentlemen once again for your time for this call and also your trust in Ashoka. We are as an industry going through a lot of positive momentum. Although we are also trying to navigate some challenges. But we hope that we will have a good quarter and a good year. A good year to close with. Thank you very much.
operator
Thank you on behalf of ICICI securities limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.