Ashok Leyland Expects Q1 FY26 Profit Dip Due to Steel Price Surge

Key Highlights:

• Ashok Leyland anticipates lower profits in Q1 FY26.
• MD & CEO Shenu Agarwal stated the company is actively working on cost-cutting measures.
• Despite near-term challenges, Ashok Leyland expects steel prices to stabilise by Q2 or early Q3.
• Other commodities, like rubber, are showing signs of price correction.
• In FY25, the company improved its operating margin to 12.7% and cut material costs by 5%.

Ashok Leyland expects lower profits in the first quarter of FY26 due to higher steel prices after safeguard duties were imposed. However, they believe that commodity prices will stabilise by the second quarter, reducing the overall impact on their earnings for the year. Shenu Agarwal, Managing Director & CEO of Ashok Leyland, mentioned in a press conference, "We're facing challenges with steel prices, especially with the new safeguard duty announcement."

India Imposed 12% safeguard duty

In April, India introduced a 12% safeguard duty on certain steel products for 200 days to reduce the entry of cheaper imports and support local steel makers. This step was taken as the country, which is the world’s second-largest crude steel producer, continues to face an increase in steel imports. As per early government data, India stayed a net importer of finished steel for the second year in a row (2024–25), with imports touching a nine-year high of 9.5 million metric tons.

Agarwal mentioned that steel prices have been rising since March, and this trend is likely to continue in the early months of the financial year. “The first quarter will be affected in terms of profits due to high steel prices,” he said. However, the company is working on ways to reduce the impact.

Despite the short-term challenges, Agarwal remains hopeful that steel prices will become stable as the year moves forward. “We expect prices to settle down quickly after the first quarter—likely in the second or early third quarter,” he said. He also made it clear that the overall yearly profits are not expected to take a major hit. 

The head of Ashok Leyland also highlighted some positive signs in other commodities that could help ease the impact. “Rubber prices, which went up by 7–8% last year, are now coming back to normal. A few other commodities are also supporting us. Overall, even though steel prices are rising, the impact should not be too high. And in any case, we are fully ready to handle the situation,” Agarwal said.

In FY25, Ashok Leyland’s total standalone expenses increased slightly to ₹34,758.43 crore from ₹34,727.70 crore in the previous year. However, the company managed to reduce its biggest expense, material costs, by 5% compared to last year. Its operating margin improved to 12.7% for the year, up from 12% in the previous year.

Also Read: Ashok Leyland Declares Second Interim Dividend for FY25

CMV360 Says

Ashok Leyland's proactive approach to managing rising steel costs shows strong leadership and planning. While the first quarter may be challenging, the company's focus on cost control and confidence in market stability reflects resilience. If steel prices come down as expected, it may not impact profits too much.