Ashok Leyland Limited (NSE: ASHOKLEY) Q4 2025 Earnings Call dated May. 23, 2025
Corporate Participants:
Unidentified Speaker
Dheeraj Hinduja — Executive Chairman
Shenu Agarwal — Managing Director and Chief Executive Officer
K.M. Balaji — Deputy Chief Financial Officer
Analysts:
Unidentified Participant
Rishi Vohra — Analyst
Chandramouli Muthiah — Analyst
Kapil Singh — Analyst
Raghunandhan — Analyst
Vipul Agarwal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Ashok Laydown Limited Q4FY25 earnings conference call hosted by Kotak 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 is being recorded. I now hand the conference over to Mr. Rishi Vohra from Kodak Securities. Thank you. And over to you, Mr. Vohra.
Rishi Vohra — Analyst
Thank you. Good evening and we welcome you all to the Q4 and FY25 earnings conference call of Ashok Leland. Today we have with us Mr. Dheera J. Hinduja, Executive Chairman, Mr. Shenu Agrawal, Managing Director and CEO and Mr. K.M. balaji, President, Finance and CFO from Ashok Leland. I would like to inform you all that the call is being recorded and the audio call and the transcript will be available at the company’s website. I would now like to invite Mr. Dheeraj Hinduja for his opening remarks. Over to you, Mr. Hinduja.
Dheeraj Hinduja — Executive Chairman
Thank you. Good evening ladies and gentlemen. It gives me immense pleasure to share our company’s performance for the fortune ended March 2025. This has been truly a remarkable year with the companies achieving historic highs in revenue, profit and profitability. We remain committed to our journey of profitable and sustainable growth through levers of product premiumization, cost leadership and expansion of Service reach. In Q4 we further consolidated our position in that direction. Our net profit in Q4 FY25 jumped 38% year on year. Our EBITDA margin for the quarter at 15% is the highest ever quarterly EBITDA margin coming to domestic Ms.
Cv. Industry volume was almost in line with our expectation at the beginning of the year. During the year, however, it was tricky in terms of how the industry volumes played out against estimate in Q1. While the industry experts predicted degrowth, industry volumes went up in Q2. When everybody turned bullish, industry volumes fell more than 10% in Q3. The fall decelerated before full throttle up move in Q4. In Q4 domestic MSCV TIV was up 27% sequentially and 4% year on year. For FY25, industry volume was at same level as previous year and this was remarkable turnaround and over as well.
For FY26, a show played in Q4 FY25 domestic MSC volumes at 36,053 numbers was higher 4% year on year in line with the industry Domestic MSV Truck volume was at 29,089 numbers higher 4% year on year and MSTV bus volume was at 6,964 numbers. For the year ended March 25 domestic MHCV volume was at 114,789 lower 1% year on year with trucks at 93,540 lower by 5% and buses at 21,249 higher by 18%. Ashok Leyland continues to retain 30% plus market share in domestic MHTV market. For the year ended March 25 our market share stood up 30.9%.
Ashok Leland LCV domestic volume in Q4FY25 was 17,660 number lower 2% year on year. For the year ended March 25 volume was 65,049 in the addressable 2 to 4 tonne market for FY for the full year FY market share was at 18.6% lower than 19.3 in the previous year. Full benefit of the new product launches are sinking in and we are further intensifying our product innovation to improve our market share to 20% in the short term and 25% in the medium term. In Q4 we had launched Sati our foray towards sub 2 ton segment along with 5 other expanding market coverage in terms of both loads carrying capacity and alternate fuel powertrain.
We continue to expand our domestic Network. We added 108 MHCV touchpoints and 106 LCV touchpoints during the year with most of the additions in north and east. As of March 25th Ashok len network has 1889 touchpoints. Pan India export volumes registered a growth of 52% in Q4 on year on year basis for the year ended March 25th exports volume at 15,255 numbers was higher by 29% against 11,853 numbers in the previous year for non CV businesses also our non CV businesses also witnessed good growth momentum On Q4 engine volume was higher by 9% and domestic spare parts revenue was higher by 15% on year on year basis.
For the year ended March 25th engine volume was higher by 2% and spare parts revenue was higher by 14%. Engines business growth was low single digits due to higher base effect created by DPCB norms. Pre buy in FY24 defense revenue for the year was at same level as previous year. Order book for FY26 is healthy. Coming to financials Ashok Laden recorded all time high Q4 and full year revenue EBITDA, EBITDA margin and profit after tax for Q4 SY25, revenue was at rupees eleven thousand nine hundred and seven crore higher by 6%. Year on year EBITDA was at rupees17.91 crore higher by 13% year on year.
EBITDA margin for the quarter was at 15%. Operating PBT was at rupees 16. 71 crore higher by 14% year on year reported PAT at rupees 12. 46 crores was higher by 38% year on year. For the year ended March 25th revenue was at rupees 38,753 crore vis a vis rupees 38,367 crores. For the previous year EBITDA was at rupees 4,931 crore higher by 7% and PAT was at rupees 3,303 crores higher by 26%. EBITDA margin was at 12.7% vis a vis 12% for the full year. 24 material cost as a percentage of revenue was at 70.6%, lowest in last eight quarters.
For the period ending March 25th the ratio was 71.3% vis a vis 72.8% in FY24. This was achieved by our continued focus on material cost saving and supported by softer commodity costs. During first 3/4 of the year we expect commodity headwinds from safeguard duties on steel and impact of emerging global tariff dynamics. Our balance sheet and cash position have grown stronger. At the end of the quarter we were cash positive at Rupees 4,242 crore against a net debt of Rupees 89 crores. At the end of the previous year, Capex for Q4 FY25 was Rupees 300 crores and Investments in Group companies was approximately Rupees 200 crores.
Cumulatively for the year, Capex was Rupees 954 crores and Investments approximately Rupees 200 crore. Capex and Investment together was lower at Rupees 11. 49 crore vis a vis Rupees 2,060 crores. In FY24 key initiatives targeting customer experience and transforming service operations have started yielding results in domestic mstv. Our show Caden ranking has improved to number one in Dealer Satisfaction Index and number two in Customer Satisfaction Index and Sales Satisfaction Index. Leveraging digital platforms these initiatives will help us in our objective of product premiumization. Ashok Layden continued to focus on product and process innovation to meet dynamic customer and market needs and to maintain its technology leadership position in both ICE and alternate fuel space.
During the year we launched several products across segments and powertrain. Key highlights for the year were six new products including Sati and LEO in the LCV segment, IVAC Intelligent vehicle acceleration control for improved economy in MSTV truck segment, cost competitive fully built Oyster CNG and Oyster V Max in the bus segment and 55 ton and 19 ton battery electric vehicle trucks. We are working on several new products. Some of them like EV terminal tractor and 15 meter SE coach were showcased in the Auto Export 2025 and would be ready for commercial production in current year.
We have made significant progress on the center of Excellence focused on EV for the coming AC regulation. All our products in the affected segments are ready. Another highlight of FY25 was inauguration of our bus manufacturing plant at Vijayvada. This along with the new plant and the construction at Lucknow would augment our bus body building capacity to deliver quality fully built solutions to our customer. Switch and om, our EV subsidiaries are progressing as per plan. Switch India business is doing exceedingly well. In Q4 Switch India made outright sales of 287 buses and 300 ELTVs resulting in double digit EBITDA 12% for year ended March 25, Switch India was EBITDA positive at 6%.
At the end of the year Switch India had an order book of 1,800 numbers in FY25. Switch Mobility launched Switch E1 designed for Europe and GCC and Switch EIV 12 low floor electric bus tailored for the Indian market. OM, our EMASS subsidiary is operating more than 650 buses with fleet availability of 98% plus. OM is targeting to add 1700 buses to operations fleet during SY26. Part of these additions will be from the current order book of Switch India and remaining from the fresh winds. OM has all projects under execution at healthy double digit irr. You are aware that the board of Switch UK has given their approval to commence a consultation process with its employees which could potentially lead to cessation of manufacturing and assembly facilities in the Sherburne UK facility.
The consultation is progressing as per Plan. Ashok Leland made significant progress on its ESG commitment. Ashok Leland was ranked number one globally in the Heavy Machinery and Truck category by Sustainable Sustained Analytics. Our DJSI ESG rating has Significantly improved by 144% in the last two years and we are placed among the top 5%. Our road to School and Road to Livelihood programs continue to grow, extending their reach to about 5 lakh students now. With 92,000 students added this year and targeting to add another hundred thousand students in SY26 we made significant progress towards RE100, improving from the level of 61% at end of FY24 to 69% now for the year ahead.
There’s a lot of optimization on the ground and all key indicators are indicating growth. Fleet utilizations are holding up, freight rates and operator profitability are stable, inflation is moderating, monsoon predictions are above average and core sector growth estimates are upbeat. We are cautiously optimistic on supply chain benefits of global tariff dynamics accruing to our economic activity. Continued government push on infrastructure projects augurs well for MSCV trucks, particularly tippers. We believe that FY26 would witness growth in all CV segments including LCV, ICV and Ms. CV, Goods and Passenger I would also like to clarify one more aspect.
In the previous call there was a question on pledge of shares by the Promoter Company. I’d like to put this in perspective. There need not be any concern with reference to pledging of Promoter shareholding in Ashok Lehlin Ltd. Every business industrial house does treasury function which as we are all aware includes leveraging its assets as well for the time being as a short term measure in a growing economy. As part of the treasury function, the Promoter Company has pledged some portion of its shareholding in the company. Voting rights of the pledged shares continue to be with the Promoter Company.
As you may be aware that many Promoter Companies do pledge their holdings directly or indirectly through their holding company structure. We have never divested our shareholding in the company. I would like to confirm that the financial position of the Promoter Company is robust and healthy. Promoter Company has several other assets as well apart from shares of Ashok Leyland Limited. Pledge is purely a Treasury function and as a short term measure, Promoter Company has always subscribed to all capital calls made by the company and the Promoter Company has always provided full support and will continue to provide all support to the company.
Thank you for your continued trust in Ashok Leiden. We will continue to march steadfastly towards the medium term goals shared with all of you. Achieve Mid Teen EBITDA Achieve MFCV market share of 35% substantial growth in our non core non MSCV businesses, leadership in alternate fuel vehicles, value unlocking from subsidiaries and leadership in esg. I now hand it back to the moderator for any Q and A. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star N1 on the attached tone telephone. If you wish to remove yourself from the question queue you may press star N2. Participants are requested to Use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chandramoli Muthaya 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 industry outlook that you touched upon towards the end of the prepared remarks. Some of your peers have indicated that there could be single digit volume growth in FY26 for the CV industry at large. So just trying to get your understanding on what you would expect for the MHCV segments, the bus segment as well as the LTE segment. Just given that this year we’ve got AC cabin norms. You did mention steel safeguard duties upfront and also lack of clarity around broader government capex.
So just keeping all those factors in mind, just trying to understand what magnitude of growth you would expect for each of these.
operator
Can you hear us?
Dheeraj Hinduja
Hello, can you hear me now?
operator
Yes sir, now we can hear you. I believe you.
Dheeraj Hinduja
Thank you. Yeah, thank you for the question. More or less we are in agreement with the estimates given by the peers. We also believe that this year could be a positive year for the CV industry. Last year was not so bad but this year we are seeing that lot of macroeconomic factors should help move the industry in a positive direction. We know that government capex which had slowed down last year is now back in shape. We do believe it will continue to expand from here onwards. We do know that monsoon estimates are pretty strong, so that should also help.
We also understand that the core sector growth estimates are also positive. And finally we know that there is a pent up demand that is available both in the truck and the bus segments, especially with the high aging of the fleet. So I think if we think that the macroeconomic factors act in the right direction, we should see a positive momentum in the industry. Now Q4 has been positive at 4% roughly growth in the MHCV segment and that gives us a good signal of the times to come. Now Q1 specifically last year had grown by 10% as Dheeraj also said in the MHCV segment and therefore we may not see that much growth in Q1 but starting with Q2 because Q2 last year had a negative growth, pretty large negative growth of 12 to 15% in MHCV.
Therefore the growth in Q2 should be substantial. But like I said overall for FY26 we are pretty optimistic.
Chandramouli Muthiah
That’s helpful. And just as a follow up to this question, if you could just give us some color on each of the segments, buses, trucks, LCVs. If you could give us your pecking order in terms of where you think there is more growth momentum available and where it might be relatively low.
Dheeraj Hinduja
Yeah, I think few of the segments should do better than the rest. The number one is buses. As I said, we still think there is a pent up demand. Although last year, last few years buses have grown substantially, but still there is lot of demand that will come out. You know this is both STU and private. Even when we talk to various STUs they are very gungo on the, you know, on their buying capacities or buying potential for FY26. And same is the case with private. So buses definitely will stand out I think closely. It will be followed by the tractor trailer segment.
We know that there is a lot of shift happening towards 55 contractor traders so that the segment should also continue to do well. One segment which hasn’t done that well last year was tippers. But with all the core sector activities gaining momentum, especially mining and construction, we think Kippers segment should pose some positive surprise this year. Yes, so those, I think those are the two or three segments which should do better than others. But I mean even on ICB trucks or MAVs we don’t see any headwinds right now.
Chandramouli Muthiah
Got it. That’s helpful. My second question is just around the safeguard duties on steel that you’d also called out in the prepared remarks. Also the AC cabin norms which can potentially come through in October this year. If you could just split out what is the rough cost inflation that at this stage you’re expecting from both of these factors and what that might mean for your medium term margin goals in terms of time frame and so on.
K.M. Balaji
Yeah, so see quarter one seems to be a little bit challenging in terms of the commodity costs. You know, so AC is coming up as a regulation. The impact of the price could be anywhere between 0.5 to 2% depending on the model. We don’t think it will be a major problem in passing on these prices with immediate effect. So we will, we will, of course we will navigate and we will see how the market reacts to this. But I think most of the customers, at least what we know, are actually looking forward to this change.
So drivers are more and more demanding AC trucks and even the operators are thinking that, you know, to drive retention of the drivers they need to provide them this extra feature or the extra comfort. Right. So there is a lot of acceptance in the market overall on the AC mandate and we do not see any resistance from the customer side in paying for this, so that is on the AC side. But the steel side there are, yes, there are pressures. I mean since government has introduced a safeguard duty on steel there would be some upward trend in the steel costs which we are already, which are already staring at us.
Quarter one, our expectation is that steel prices might go up by three to five rupees. Quarter two, also little bit more inflation we can see in the steel. But since this measure is on a temporary basis, government had announced it to last only 200 days. So we are expecting that even before that 200 days are over, you know, we will see the neutralization. So at best we would say three to four, maybe max, five months of impact because of this. However, you know, some other commodities are actually moving in the favorable direction. For example, rubber, you know, rubber had increased by seven rupees or so, 7% or so last year.
But now rubber is coming down. Similarly, some other commodities are coming down. So I think net impact wouldn’t be very dramatic. In any case, we are, I mean industry and shoe clean both are trying to see how much we can improve on realization to negate this. But yes, it is a challenge for quarter one. I would say quarter two things should stabilize and quarter three onwards, I think this should be neutralized.
Chandramouli Muthiah
All right, that’s helpful. Thank you very much and all the best.
operator
Thank you. Next question is from the line of Kapil Singh from Nomura. Please go ahead.
Kapil Singh
Good evening. Congratulations on the strong performance couple.
operator
Your audio is not clear. Can you please speak to the handset?
Kapil Singh
Yeah, one second. Better now?
operator
No, we can still not hear you.
Kapil Singh
Hello.
operator
Yes, go ahead.
Kapil Singh
Yeah, so I was just saying congratulations on a very strong performance once again for this quarter and the year. I wanted to understand firstly on the cost levers that you’re looking at over the next one to two years. You’ve talked about some cost pressures. But we have as a company and as an industry done quite well in the face of a lot of cost pressures through the last four or five years. So you talked about realizations but if you could talk about some other areas where there can be cost reduction or potential margin drivers over the next two to three years.
Shenu Agarwal
Yeah, Kapil, firstly, thank you for the compliments. We are indeed quite happy with the results. Especially quarter four has been really good overall year. Also we have been able to move our margins up, EBITDA margins up. And we are sitting on a very strong cash position at the end of the year which means that we can invest more and more into the future growth of the company. But just Coming to your specific questions about the levers available for us to improve on margins and market share both, you know we had a very consistent strategy over last couple of years.
So I would like to spell it out again just for everybody’s benefit. So firstly you know our aim is to add more and more value into our products. You know you can call it premiumization of our product portfolio but the idea is basically to provide more value to the customers and have the ability to charge more for it. So that is one, we are doing a lot of work on the products at variant level, at the model level, segment level to see how we can provide more value to the product so that price realization, benefit definitely we are targeting in the next couple of years.
The second is you are aware that we are the cost leader which means that our cost per vehicle on an average basis is lower than that of the peers. And this is a great strength we think Ashok Leland has and we do not want to lose on this strength. And therefore efforts on cost optimization, whether it is material cost or any other cost would continue to happen. Last three years actually had a great success story because we continuously saved hundreds of crores of cost in our P and L and that will continue even for FY26.
We have taken a very ambitious target on cost savings and it will start happening from Q1 itself. So it will help us navigate this little bit of a challenge that we are seeing on the steel. And the third lever is on the after sales side. Like Dheeraj also mentioned that we started a new project a few months back and the aim of that project is to deliver best in class service to our customers. Now this particular aspect is very important, especially in the CV industry. I would say as important as giving a superior product. Because this is a revenue generating product, right? So if the product is out of service for eight hours, customer is directly losing that eight hours of revenue.
So our intention is through this project is to how to reduce that downtime of the product even for scheduled maintenance, how can we run it, how can we do it much faster? So the levers are common. I mean we are not doing anything new. But the cumulative effect of the advantages we are deriving out of these three levers are showing in our financial results and we hope to continue to do the same in future as well.
Kapil Singh
Sure sir. So the second question is on capex and investments if you could let us know what is the target for FY26 and in what areas will you be looking to invest? And on electric in particular, we have not seen for the buses, the kind of orders that you know, at one point we were hoping for. So just if you could talk about the landscape there because it seems like most of the orders are coming for diesel buses.
K.M. Balaji
Thanks. On the capital expenditure side in FY25 we ended up with around 900, 950 crores and we actually have plans to end at the same level or at around the same level in the next financial year also we’ll be doing around 1000 crores. Essentially these the capital expenditure will be aimed towards developing the capability as well as towards getting into more on the new technologies. We’ll be more focusing on that alternate fuel, the newer technologies, all these things including the critical components of this electric vehicle covering the battery, motor etc. We have also started, if you’ll recall, we have also started the centers of excellence towards these critical components in an electric vehicle.
So our focus and our capital expenditure will be more incurred towards this. And on your question on the investment in the subsidiaries, essentially we will try and support the funding requirements of Switch India. Switch India may not have significant funding requirement as we understand at this given point of time their requirement would be anywhere about 100 to 200 crores. OM might require additional funding of 300, 400 crores. So what we anticipate at this point of time would be that we would invest about 500 to 750 crores. That’s the visibility we have as of now. So we get better clarity as we progress.
And also, I mean as we look at the demand for the funds from these companies, we may also get a funding requirement from the Induja Leyland Finance also. And if we get these kind of requirements then we will support, given our cash situation.
Shenu Agarwal
Just to add a little bit more color to this, you know, I mean you would have noticed our cash position is significantly better now at end of FY25 as compared to the previous year FY24 we had a net debt of about 89 crores. But now in FY25 we are sitting on cash surplus of 4000 plus crores. Right. So in a way that signals that we can invest much more actually in the future growth of the company. Like I said, future growth would come from mainly two levers. One is how we can add more value to the products and the other is how we can make our service operations much more effective and efficient. So now we can afford to be more liberal as far as Capex is concerned. We will look at more areas where we can invest in, in terms of upgrading our products. And technologies and make them more superior and relevant to the market and therefore you know, while Balaji said thousand crores but you know that we have cash to be able to spend more in the capex as long as it makes a good business case.
Right. So that’s definitely a positive also in the investment in subsidiaries I would just like to mention that Switch India in particular we had told you earlier that our target is to make it ebitda positive in FY45 which we have now achieved. In fact the quarter four has been really good for Switch India where they have achieved a double digit EBITDA margin. Now we want to continue on this trajectory and our next goal would be for Switch India to make pat positive. Now pat positive means that they will start generating some cash to be able to be self sufficient in future so as to meet their own requirements on capex et cetera and therefore over a medium term horizon we don’t see that Switch India will require too much cash on the Switch UK side.
We had already told you that we had taken a kind of decision to restructure that company moving the manufacturing operations out of uk. Now this doesn’t mean that we are exiting the market. We definitely will continue to serve the market but we are just taking production out to more efficient locations. So that would also help us reduce or nullify that 2 to 3 million pounds of loss we were making there pounds of loss we were making on a monthly basis in uk. So I think investment requirements in future of course temporarily some companies may need some investments but in future all these companies are moving in the right direction Even for HLF it is very self sufficient company.
The only reason we invested in the past was just the company was growing at a rapid pace especially the housing finance business also and just to meet the capital adequacy requirements of RBI we had to inject some small capital. But yes, I mean like I said in terms of investments it shouldn’t drag, it shouldn’t put a lot of drag on us in future. And in terms of CapEx, since we have a very strong cash position we should be able to invest in the growth.
Kapil Singh
Sure sir. And on the EV buses landscape, if. You could comment on that as well.
Shenu Agarwal
Oh, EV buses landscape. Actually Kapil, I mean generally I think the country has a very positive outlook. I mean every day you hear announcements from the government that they want to introduce or induct 14,15,000 buses into the fleet. Electric buses. Yeah, I mean of course you know it took some time because the government was coming up with you know, this whole channel as to how they will assimilate the demand of various state stus and bring it on a common platform where they can tender out these buses. And then they were also looking at establishing a payment security mechanism for these GCC contracts.
But I think more or less all of that is in place. So we should see a very healthy growth in electric bus adoption in the country on the STU side to begin with. But later over next few years it should trickle down into private sector also. But yes, switch is very well positioned. You know, I mean we claim to be the best in product and technology. We have really invested a lot in making sure our products are superior electric buses specifically. And therefore in all respects we are ready to take on higher and higher market share in electric buses in future.
Kapil Singh
Thank you sir and best wishes for next financial year.
Shenu Agarwal
Thank you.
operator
Thank you. Next question is from line of Raghunandan from Nuama Research. Please go ahead.
Raghunandhan
Thanks for the opportunity on strong margin show. Congrats to Shenu sir and Balaji sir. Sir, firstly good to see you’re expecting a positive outlook in FY26. How do you think the current upcycle is different from the previous upcycles? How do you see the performance over the next one or two years? And one concern is that I think Western DFC will be operational in second half of the year. How do you see the impact on competition from railways?
Shenu Agarwal
Yeah Raghu, thank you. It’s always good to speak to you on the cycle. You know, I mean last couple of years we have been saying that we don’t think we should look at the history and project the future. India is on a very different trajectory. We all know that India is going to be a major economy growing at rapid pace as compared to other economies. And therefore India will require a lot of freight to be moved, a lot of people to be moved. And therefore we shouldn’t say that, you know, in future we’ll have the same trends as we had the past.
However, even if the market goes down in a particular year, we don’t think the drop would be as dramatic as we have seen in the past. So one is that. The other is that I think over the last four or five years we have prepared the company’s business model in a way that we have really reduced our dependence on the MHCV which is more cyclical in nature. Now, although you don’t have the numbers but if you just do some calculations you can figure out that our EBITDA breakeven can be reached even at a very Very low volume per month of mhcv.
Right. So which means that the contribution margins we are generating from non MHCV businesses is so high now that we can take care of most of the fixed cost of the company. Now this is a very good situation to be in and I think it should give good confidence to you guys and also to the shareholders that the company has been able to shift its business model. So it has made itself pretty much immune to the cycles. So having said that, I mean like I said FY26 we are optimistic. It’s too early to predict about FY27 but largely I would say that these cycles in future would be very different.
You know there is always a chance that year could be a bad, a particular year could be a bad year. But like I said, it wouldn’t be as dramatic as before. I mean at least that is what our forecast or prediction is as far as the DFC is concerned. Yes, I mean it will impact, I wouldn’t say it will not impact at all. But I think there is such a huge fundamental potential available in the CV industry for future that the overall freight demand is going to be so much right if the economy continues to do well at 6 to 8% CAGR, etc.
That still seaweed industry should continue to grow. You know we know about the aging of the fleet. You know it is running at nine, nine and a half, ten years, which historically has been seven, seven and a half years. So we know that there is a fundamental capacity that is required to be rebuilt in the CV industry. Now it is just waiting for the right triggers. And FY26 is pointing to all those figures. I mean whether it is interest rate or core sector demand or monsoon or government capex, so they are all pointing in the right direction.
So we are quite hopeful of the CV industry cycle.
K.M. Balaji
Just to add on to what Shenu has said last three years, if you will look at the numbers which we have posted on the domestic MSCB side, we have done about one 14,000 to one 16,000 vehicles. But if you look at the margin we have moved from 8% to 12% to 12.7% now. So that’s the proof that we have built a model which is resilient to the cyclicality of this trucking industry. The non truck business have been doing very well and the commodity costs have been quite conducive. The recovery has been quite good in few years.
So all these engines have fired and they have helped us to maintain and improve on the margins from FY23 levels.
Shenu Agarwal
Yeah. And Raghu, I mean this is the point. I think many of the people are missing. You know, the CV industry or the CV sector is not same now as it was in the past. Right. We have a very, very different looking P and L. You know, when you divide it into segments and you divide it into various forms, you know, I mean we are not that much susceptible. I’m not just saying a show planning but even as an industry because others have also done quite well in this regard. But our P and LS of CV sectors are very different now.
So we should not be that much concerned that it is a cyclical industry. And therefore if a bad cycle comes, our Ebitdas will drop to, I mean will drop to lower levels or it will become red and all that. Right. So like I explained, you know, we have really worked on correcting this business model and now very much we are immune to kind of these cycles. There would be of course some impact of a bad cycle, but it wouldn’t be as much.
Raghunandhan
Thank you so much sir for highlighting all the points. One clarification, given that the focus has been to increase the share of non cyclical portion in revenues which is also supporting the profitability as Balaji sir highlighted, would non cyclical portion be roughly about 50% of revenue? And relating to that, one of your high growth, non cyclical portion has been the exports. If you can talk a bit about which regions are expected to do well for FY26.
K.M. Balaji
Yeah, your number is quite right. It’s in that range of 50% or so. But let me just give you a little bit more commentary on non cyclical or non MHCV businesses. I think number one I would like to talk about is exports. We are very happy with the way our exports is going. Last year we had a 29% growth in the volumes and we have actually been able to increase our margins substantially while growing at 29%. So the direction is right. And as I have said before, this is not just the result of the efforts of the last few years but also the way we have set up our international business is very different.
Right. So I mean we have taken an approach that wherever we will go, whichever market we will go, we will use that as our own home base. You know, we’ll treat it the same way as we treat India as a market, which means we will act local, which means we will open up assembly or a manufacturing facility there, we’ll source components from there, we’ll do local value addition, we’ll hire local people, we’ll have Our own operations, offices, we’ll have our own people interacting with those customers. You know, I mean it’s a long term strategy which is really working well for Ashok Leland and is showing up in the numbers now.
But we will continue with this strategy. And you would agree that it is very difficult for someone to copy this strategy over a short period of time. So I think on exports will continue to grow not just in the home markets we have right now which is gcc, Sark and Africa. But we want to open up another home market for us which is asean. We have made some smaller moves there. We have distribution partnerships in Malaysia and Philippines already. We are actively looking for partners in Indonesia and Thailand which are much bigger markets and markets which are very relevant for products like ours.
And also at some point in time we would look at having a local facility there also to locally assemble our products. So there is a lot of action going on on the product side also in making sure that our brand is moving in the right direction in this market. I mean this month we are actually inaugurating having a big inauguration in South Africa to launch various products there. So exports is moving the right direction. But it’s not just exports. Also psp, Defense or Aftermarket, I mean Parts, you know all of them are doing very well and all these are higher margin businesses than the MHCV business or the LCV business.
So Defense in particular we are very, very confident of. I can actually tell you with lot of surety that we are destined to double this business in next two to three years. Parts also is growing very, very healthy. I mean last year we had a close to 15% growth. So yes, I mean we are putting a lot of focus on the non cyclical revenues. Not that it means that MHCB we are diluting our focus on MHCB is will continue to be our bread and butter and our core. So yeah, but this is helping exports. The power solutions defense parts are helping a lot.
Raghunandhan
Thank you sir. And wishing that export share keeps increasing for us. Just a last question on hlsl. Can you talk about the book size and growth and current net worth of the company and any timeline for the reverse merger and listing.
K.M. Balaji
Regarding your question on this AUM it has increased to 61,700 crores. That’s the consolidated number, roughly 62,000 crores. There’s a 25% year on year growth. Standalone AUM is about 48,000 crores and Hinduja Housing Finance is about 14,000 crores which has grown by about 31%. Standalone has grown by about 24% and the combined growth is about 25%. Revenue from operations consolidated is about 4,700 crores crores. It has moved to 6,281 crores. From 4,700 crores last year it has moved to 6,281 croros, a 35% increase. Profit after tax has also gone up by about 21%. The asset quality is quite good with the GNPA at 3.5% and NNPA at 2.1%.
All these are much lower than the last year levels.
Raghunandhan
And just the network, sir.
K.M. Balaji
Network. I don’t have it.
Dheeraj Hinduja
We’ll get back to you on that, Raghu. But I think I just want to add that, you know, we have always said, and most of you will agree, you know that our share price of Ashok Lennon actually does not reflect. Fully reflect, I will say, the. The value that we have in our subsidiaries. Yes. So whether it is HLF or Housing Finance which is doing really well or even other companies. So I think we would take those actions to unlock this value as the right time. We had spoken to you about the listing of hlf.
Although we are delayed. We had earlier indicated we will do it around Q1 of FY46. But we are delayed. We are still waiting for some approvals. Some of them have come, but one or two important ones are still pending. But we are expecting these will come sooner than later. And once we have all the approvals, it wouldn’t take more than one or two quarters to list the company. But we will. We are focusing on unlocking the value of various subsidiaries. So it should start reflecting in our share price.
Raghunandhan
Thank you very much, sir. Wishing you all the best.
operator
Thank you. Next question is from Nana Samantha Rani from JP Morgan Chase. Please go ahead.
Unidentified Participant
Yes. Hi. Thanks for the opportunity. My first question was actually on your margin expansion that you’ve been able to achieve over the last two years. So like even Balaji was mentioning over the last two years specifically, if I look at your raw material on an absolute basis, your raw material per vehicle per unit has actually come down. So is there any specific measure that you have taken to reduce that or is it just a function of mix? Because obviously other expenses have moved up because of lack of operating leverage. But in raw material you seem to have actually brought it down on an absolute basis also.
So if you can highlight something there that will be really helpful.
Shenu Agarwal
Yes, I mean that is right that you know, this is basically a result of our last three years of efforts to reduce the cost. But you should also keep one thing in perspective, right? That in 2020, when we were shift, when we shifted from BS4 to BS6, our overall material cost base had expanded heavily just for the industry, not just for us, right? And whenever you come up with new technologies that pushes your cost up so much, you also create an opportunity to relook at those costs and bring them down. It’s just a basic engineering principle, how engineering works.
Because whenever you come up with a new technology, you want to make it safer, you want to take, make it first time, right? And therefore in that, in that process you build up, sometimes you build up more cost than required. But over a period of time, when you are re looking at that cost and when you are looking at the performance of those products in real world situation and you are analyzing those load conditions or data that is available, then you know there are opportunities to reduce the cost, right? So basically that is what is driving the industry level cost reduction now specific to Ashok Leyland.
I mean we are taking it really seriously. We are using all kinds of levers, whether it is working closely with the suppliers to look at alternatives of building that product or whether it is teardown analysis, looking at other products in the market and comparing ourselves with those and trying to see where we can reduce. And it is not limited to just material cost. You know, we are looking at even other variable or even fixed cost to see wherever we can remove the waste. So yeah, industry overall has moved in the right direction and I think we have done slightly, probably slightly better than what industry has done as long as in terms of cost savings.
Unidentified Participant
Okay, that’s helpful. And secondly, this year we’ve also seen a very sharp reduction in working capital. So again, you know, if you can shed some light, is there some, you know, temporary one offs which are helping us or is this the new normal for working capital? Because from a slight positive working capital day, we’ve gone to a significantly negative working capital day. So some, some help there would be, you know. You know.
K.M. Balaji
I mean actually what has happened is in this financial year we could do a very sharp reduction on our finished goods inventory. Earlier years it used to be about 8,000, 9,000 vehicles at the year end, but now this year we have really brought it down below 7,000 vehicles. This has significantly added to our overall working capital reduction. Similarly, the production inventory is also low and we have also brought down our credit substantially over the years. With reference to the medium and heavy commercial vehicle truck business, we are slowly moving towards our original situation of cash and carry route.
We have brought our credit down now to almost very negligible level. Very less than thousand vehicles are in credit at month end where we get the money also collected in the first week of the next month. So all these have substantially improved our working capital as well as the cash situation during the year.
Shenu Agarwal
Just to add a little bit on that, you know, I mean I think financial, creating a financial discipline on the front end side, on the sales side has been one of our focus areas. So that is what has resulted in lower receivables and also that has resulted in lower inventory. Right. Also now we are still in the middle of this but we are shifting entirely to a new process where the inventory is not built based on the forecast that we received from the fee. But there is a very different full base replenishment model that we are applying.
So you have seen some reduction in inventory but going forward you will see that inventory would reduce further. Right. On the payable side there has been no movement. It is just a timing issue because quarter four is like much better and therefore, you know, especially when you don’t give any credit to the dealer then you have these large tables that are at end of March. So some of it is timing. But yeah, I mean last March to this March is a significant swing because of, mainly because of receivables and inventory.
Unidentified Participant
Thank you. And if I can just squeeze in one more question. Given the significant, you know, movement in, you know, net cash position, your interest plus other income line is still, you know, not showing that significant improvement. Should we see that into next year like the other income plus the interest cost becoming significantly favorable?
Shenu Agarwal
Definitely you will see that.
Unidentified Participant
Okay, thank you.
K.M. Balaji
Year on year our other income seems to be at the same level, no?
Unidentified Participant
Yeah,
K.M. Balaji
it is around the same level. 250 crores. Yeah, it is at the same level. And similarly on the finance cost it is much lower. It has come down, it has come down by about 15 more than 15 to 20%. It is a reflective of this better working capital position.
Unidentified Participant
Thank you.
operator
Thank you. Next question is from Nana Vipul Agarwal from hsbc. Please go ahead.
Vipul Agarwal
Hi, thank you for taking up my question. So you talked about average age of vehicle to be around 10 years. So given the steep price hike in last five years, would it be fair to assume to be a new normal? And if not like then what would be the triggers for the pent up demand to reflect in the numbers?
K.M. Balaji
Very hard to give you a number there but I mean we do believe that at some point in time, point in time this has to Come to a level of around eight or eight and a half. Right. So although the previous norms were more closer to seven and a half or so. So there would be some increase in the life overall just because of technology improvement, reliability improvement, et cetera. Right. But just I still think there is a gap in what it is today and what it should be. Right. So it should reflect at some point in time.
I mean there are other factors also that play a role in triggering this pent up demand. And like I said FY26 those factors are looking positive. So let’s say, I mean although right now we are projecting kind of a single digit growth in FY26 but we may have some surprise in store.
Vipul Agarwal
Thanks for that. The second question is on the defense business, like how is it shaping up? Can you talk a bit on the product pipeline which might be introduced maybe on next couple of years and what will be the order book for the defense business? If I missed it earlier?
K.M. Balaji
Yeah, yeah, order book is very strong. We wouldn’t like to place a number there. But you can rest assured that the order pipeline is strong. Pipeline meaning the orders which we have in hand are the orders where we have visibility that we will win. So it’s at an all time high. We are already above thousand crores in top line on the defense. We, like I said, you know, I mean we are extremely confident based on the order pipeline that we would be, we would be doubling this in next two to three years. The top line also we are looking, I think we told you last time, also we are looking at how we can expand our defense portfolio so that even outside mobility, you know, how we can play this huge momentum that the country has towards localization of defense equipment or defense supplies.
So we are looking at those levers. However those would be long term, you know, defence has a very long gestation period. So that would like play out over five years or so. But even in the near term with the current vehicles or the current portfolio we have, we are very confident about defense growth.
Vipul Agarwal
Understood. Just the last question. If I can squeeze in in terms of discount like we see that absolute discount per truck are largely stable but increasing indirectly in terms of increasing tenure of AMC like going up from 3 years to 5 years and 2 for the large operators is goes up to like 780 years as well. So how do you see that like in long term, how would you. We see AMC supporting the spare parts revenue or it will have a negative impact on growth of spare part revenue. How should we look at it from spare parts Revenue growth perspective.
Shenu Agarwal
Yeah, actually we have stopped tracking the discounts and we are more tracking the net sales revenue. Actually we are not concerned about the discount in the market and what we are more worried is the net sales realization. This is what we are tracking and you will see that moment moving across favorably across the quarters. And what is your next question?
Unidentified Speaker
Amc. Amc.
Shenu Agarwal
We see, yeah, we see good, good possibility there and we see good margins for us also there. But I mean it is too early to comment on that. Market will have to mature a bit.
Vipul Agarwal
Understood sir. Thanks a lot.
operator
Thank you. Next question is from. From Incred Equities. Please go ahead.
Unidentified Participant
Yeah, hi, thanks for taking my question. So congrats on the EV bus momentum which you have been able to achieve and the turnaround in switch mobility. Wanted to get your thoughts in terms of EV trucks also you have started delivering how has been the product performance on key parameters 1 and 2nd? What are the client feedback and what are the improvements you’re planning there for the financial year 2627?
K.M. Balaji
Listen, EV trucks, you know, the penetration is still under 1% but we are very proud to say that, you know, in terms of just volume, although it is limited, you know, has the highest volume there. I’m not talking about the LCVs right now. I’m talking about medium and heavy duty. I think we have the widest range also available in medium and heavy duty trucks. Because you are aware that we launched our boss EV truck which is 14 to 19 ton GVW last year and then recently we also launched our 55 ton tractor trailer EV. We also showcased India’s first port terminal tractor which is 100% EV in the auto Expo.
We are preparing ourselves to launch it commercially within next one year or so. So I think we are ahead of the curve here as far as the EVs are concerned. Of course there is new competition also emerging, especially some players from China are bringing some equipment, some vehicles from China either fully built or you know, SKUs, SKDs, etc. But I mean based on our current experience we can say that our technology and product maturity is far better than some of the other EV trucks available in the market. So we will continue to work on this, we’ll continue to mature the technology further.
We’ll also participate in the ecosystem level with the government or other partners to make sure that this ecosystem development also happens. But you can’t. I think it’s hard to expect a kind of dramatic growth on the EV trucks medium and heavy duty side. Now the LCV story is different because LCV Adoption, you would know that most of the projections are saying that it will touch about 20% penetration by 2030 or 2032. And you know that Switch is already had already launched products in the LCV segment, electric LCV segment, they are doing really well. Of course the market is limited, especially government withdrew the PME drive incentives on lcv.
So market will take some time to kind of gain more traction. But we are there in terms of products etc. When it comes to hydrogen. Very proudly we say, although the number is small, but very proudly we say that we have the largest top hydrogen ICE trucks in the world. We have a customer partner with whom we are running this pilot lng. We have been slightly delayed to the market, but we are catching up. And this year you will see some launches in the LNG segment also.
Unidentified Participant
Sure. Thanks. And the second question is with regard to defense, considering that we still have a substantial hardware exposure versus the recent offers have been more electronics. In that sense, any medium term thought process how you want to drive this business through JVS or some technology partners to capture the incremental relationship benefit in the defense portfolio.
Shenu Agarwal
Yeah. Firstly, I think there is, like you said, there is a very clear shift as to how defense is playing out. It’s moving more and more towards, you know, electronics and other stuff. But. But it is not going to have an impact on the mobility where we play a role. Right. Everything has to be moved. Right. Irrespective of whether it is sensor based equipment or radar based equipment or it is a gun or something else. Right. So it won’t have an effect on mobility which is our current area or current domain. Now like I said, in future we are looking to expand beyond mobility and we are still working on that strategic roadmap.
And as soon as that is finalized, we will definitely come back to you and share with you about our ambition on defence beyond mobility.
Unidentified Participant
Sure. Thanks. And all the best.
operator
Thank you very much, ladies and gentlemen. We will take that as a last question. I now hand the conference over to the management for closing comments.
Dheeraj Hinduja
Ladies and gentlemen, thank you for all your questions. I hope you got the clarification. I would just like to close by. Saying we do see the new financial year to bring growth in all the vehicle categories and we are ready in respect of the growth that’s happening across the segments with our new product and especially with the electric vehicles. You will see many new buses being launched by Switch. We also are expecting very good growth in our international operations. We had one of our best years last year, last financial year and we will definitely be improving upon that. And we also believe that Defence, as she know mentioned, will see very good growth coming through. Our strategy for Switch is proving to be in the right direction and we do see Switch India as turning positive in this current financial year.
And although there’s been this slight delay in the listing of Hinduja Leyland Finance, it continues to grow well in all parameters, in all financial parameters. And also its subsidiary Hinduja Housing Finance is now the fourth largest affordable housing finance company and also delivering good numbers, although HLS and HHS do not really figure as we see it showing a true value in Ashok Valence shares today. But it will through the listing process unlock this. And we thank you for your continued interest in the company.
operator
Thank you very much on behalf of Kotak Securities Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.