Ashok Leyland shares in focus as UK EV unit considers shutting down plant

Ashok Leyland shares fell as much as 4.6% on Thursday to Rs 205.05 on the BSE after the commercial vehicle manufacturer revealed intentions to suspend production at its UK electric bus affiliate, Switch Mobility, due to increasing losses. Additionally, one of its proprietors, Hinduja Automotive, pledged about 30% of its interests, valued at more than Rs 6,400 crore, according to an exchange filing. The firm said it is considering closing its Sherburn factory owing to a prolonged downturn in the British bus industry and slower-than-expected adoption of electric cars in public transportation.

The Ashok Leyland board has approved the commencement of a consultation process with concerned employees in the UK, which “could potentially lead to cessation” of production activity at the location. However, the business underlined that Switch Mobility would not leave the UK market and will continue to service current orders and provide aftermarket support from its Rotherham and Thurrock locations. Meanwhile, Switch India is expanding its operations, with Managing Director and CEO Shenu Agarwal claiming that the category is functioning “exceptionally well.” The business hopes to break even on Ebitda in FY25 and plans to treble electric bus production next fiscal year, with an order book of over 1,800 cars.

Separately, Hinduja Automotive, which owned a 35% interest in Ashok Leyland as of December 31, said in a regulatory statement on Wednesday evening that it has pledged approximately 30% of its shareholding. The decision has sparked investor fears, putting pressure on the stock.

According to Switch UK’s CFO K M Balaji, the GBP 45 million equity injection Ashok Leyland’s board agreed in February will fund the company’s continuous cash flows. He also mentioned that Switch India’s performance is exceeding expectations, which reduces the chance of more financial infusions shortly. Ashok Leyland shares rose by 27.5% in the previous year and have been down roughly 11% in the last six months. The stock has declined five the last month and is up 4.5% in the previous week. Technical indicators reveal that the stock is trading above five of its eight important simple moving averages but remaining below the 100-day, 150-day, and 200-day SMAs. The 14-day Relative Strength Index (RSI) is at 55.8, showing neutral momentum.