Ashok Leyland Share Price Volatility Amid Promoter Pledge and Auto Sector Concerns

Market Performance

Ashok Leyland's share price exhibited significant volatility on March 27. It opened at ₹206 on the BSE, reflecting a decline of nearly 5% from its previous close of ₹214.95. The stock reached an intraday low of ₹205.05 before recovering most of its losses. By 11:05 AM, it traded at ₹213.60, marking a 0.63% decrease.

The broader Nifty Auto index also experienced a downturn, falling over 2% during the morning session. However, it trimmed losses as the day progressed and was down 0.85% around 10:30 AM. In contrast, the benchmark Nifty 50 index recorded a gain of 0.53% during the same period.

Promoter Share Pledge

According to a regulatory filing on March 26, Hinduja Automotive Limited, a major shareholder of Ashok Leyland, pledged 30 crore shares with lenders. This pledge represents 10.21% of Ashok Leyland's issued and paid-up share capital.

The filing further disclosed that Hinduja Automotive holds 1,01,94,28,678 equity shares, which account for 35.01% of Ashok Leyland's total shareholding. The pledge agreement, dated March 24, 2025, involves Hinduja Automotive as the borrower and certain lenders, with Catalyst Trusteeship acting as the pledgee.

Impact of US Tariff Announcement on Auto Stocks

Auto stocks, including Ashok Leyland, faced pressure after US President Donald Trump announced a 25% increase tariff on auto imports. This news contributed to a sell-off across the auto sector, with several major players experiencing losses of up to 7% during the trading session.

Potential Closure of UK Manufacturing Operations

Ashok Leyland's step-down subsidiary, Switch Mobility Limited, UK, is considering ceasing its manufacturing operations in the UK. In a separate filing on March 26, the company cited ongoing economic uncertainty in Europe and slower-than-expected adoption of electric vehicles (EVs) in public transport as primary reasons for this consideration.

The board of Switch Mobility Limited has initiated a consultation process with employees that could lead to the cessation of manufacturing and assembly activities at its Sherburn facility. Despite this, the company will fulfil existing orders and continue providing aftermarket support.

Ashok Leyland plans to serve the UK and European markets through its manufacturing facilities in India and the UAE. Meanwhile, Switch Mobility Automotive Ltd., India, aims to expand operations in the domestic electric vehicle market, which is expected to grow substantially in the coming years.

Summary

Ashok Leyland's share price experienced volatility on March 27, influenced by multiple factors, including a significant share pledge by its promoter, concerns arising from new US tariffs on auto imports, and the potential shutdown of its UK manufacturing operations. Despite the current challenges, the company is adapting its strategy by focusing on growth opportunities in the Indian electric vehicle sector while maintaining its commitment to catering to the UK and European markets from alternative manufacturing sites.