OHM losses, cash flow weakness cast shadow on Ashok Leyland’s FY26 profit growth
AI Summary
Ashok Leyland reported an 11.7% increase in consolidated net profit to ₹3,471.03 crore for FY26, despite challenges in its electric-bus segment and a significant rise in loan valuation charges at Hinduja Leyland Finance. Meanwhile, OHM Mobility Solutions experienced a widening net loss to ₹35.69 crore, despite a five-fold increase in revenue, attributed to rising finance costs and depreciation. The overall cash flow from operating activities for Ashok Leyland fell sharply by 38.7%, indicating liquidity pressures.
Ashok Leyland’s consolidated net profit attributable to owners rose 11.7 per cent to ₹3,471.03 crore in FY26 from ₹3,106.80 crore in FY25. However, a businessline analysis of the annual report found pressure in its electric-bus business, weaker operating cash generation and a sharp increase in a loan valuation charge at Hinduja Leyland Finance. The company has responded to the findings from our detailed questionnaire.
OHM loss widens despite five-fold revenue growth
OHM Mobility Solutions’ net loss rose to ₹35.69 crore in FY26 from ₹4.60 crore in FY25, even as revenue from operations increased to ₹268.23 crore from ₹50.37 crore. Finance costs rose to ₹64.84 crore from ₹7.82 crore, depreciation increased to ₹79.44 crore from ₹17.46 crore and gross debt more than doubled to ₹1,202.59 crore from ₹440.55 crore.
The annual report says OHM “now operates a fleet of over 1,400 electric buses across Indian cities”. It describes the E-MaaS model as a way to reduce the upfront cost of electric commercial vehicles through a pay-per-kilometre model. However, it does not disclose a separate OHM order-book value, outstanding bus contracts or future contracted revenue.
Responding to queries on these findings, the company management did not dispute the reported loss or the underlying figures. It said: “The GCC model will take slightly longer to achieve PAT break-even, mainly because of accelerated depreciation of vehicles in its books. However, OHM generated cash profits during FY26.”
Operating cash flow falls as working-capital benefit shrinks
Our research indicated that consolidated net cash inflow from operating activities fell 38.7 per cent to ₹4,792.10 crore in FY26 from ₹7,819.42 crore in FY25. The cash contribution from changes in net working capital fell to ₹413.60 crore in FY26 from ₹3,740.68 crore in FY25.
The annual report says internal accruals funded capital expenditure, dividend commitments, loan repayments and working-capital requirements. It also says Ashok Leyland manages liquidity through “rigorous weekly monitoring of cash flows”.
Responding to our queries, the company attributed the lower cash flow in FY26 to the timing of the ₹1,453-crore interim dividend declared for FY25 and paid during FY26. It also cited higher inventory movement of ₹762 crore and debtor movement of ₹692 crore. “The working capital has increased and hence there was no positive impact on cash due to working capital movement,” it said.
HLFL loan valuation charge rises 89 per cent
The annual report also indicates that the company has booked a ₹1,234.24-crore charge in FY26 to reflect a lower estimated value of loans at Hinduja Leyland Finance (HLFL), up from ₹651 crore in FY25. The charge reduced reported profit, but it was not necessarily a cash payment. “Impairment is related to subsidiary HLFL. Fair valuation of the loan book impact is ₹1,234.24 crore.”
Interestingly the company’s annual report recorded a new aircraft purchase during FY26 after it replaced an older aircraft that had been in its fleet for about 19 years and sold it for approximately ₹60 crore. The new aircraft cost ₹435.31 crore in FY26 and had a closing carrying value of ₹423.82 crore after depreciation.
Original Article
Published on Hindu BusinessLine