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​Ashok Leyland’s Stocks Grow 22%, Thanks to Demonetisation & BS-IV

Published On Jan 31, 2017By Mukul Yudhveer Singh

Who says demonetisation has tumbled all the businesses running in the country? This surgical strike against black money in combination with BS-IV and mandatory AC regulation orders may have just helped truck makers with increased stock prices. Ashok Leyland, one of India’s top slotted truck and bus makers, has gained 22 percent in its stock prices since the beginning of December 2016.

How it all started?

India’s PM Narendra Modi had called in on all the Indians on November 8, 2016 and banned INR 500 and 1000 currency notes from November 9 onwards. The move, referred to as India’s surgical strike against black money had severe negative effects. Banks were flooded with customers lining up to exchange old currency notes for the new ones. Limit in cash withdrawal further aggravated the situation.

Like many other decisions based on the amount of cash in hand, many people, looking forward to buy new trucks before BS-IV and mandatory AC in trucks implementation had to postpone the decision. Experts had anticipated the last leg of current financial year to be the most fruitful for truck makers in the country. But it seemed as if the move had rattled all anticipations forecasted by industry experts.

The Present Situation

Now, as the cash flow has started coming back to normal conditions, all eyes are again set on the CV industry. TrucksDekho had also predicted the truck sales to normalise, starting last week of January 2017. The truck sales figures for the time duration before April 1, 2017 is assumed to reach new heights.

Trucks complying with new emission norms and mandatory AC regulation are believed to be priced INR 60,000 to 1.5 lakh more than the existing costs. And as the new prices are set to get dearer, fleet owners, individual truck operators and all other transport agencies looking forward to buy new trucks, will definitely try their best to buy these before the new regulations kick in.

These developments have led to Ashok Leyland’s stock prices grow by a big 22 percent within 2 months, starting December 2016. Mandatory old truck scrapping policy can also be counted as a reason responsible for increased stock share prices as truck owners, whose commercial vehicles fall under the same, would definitely want to save money by buying trucks before April 1, 2017.

No matter how poor these decisions like demonetization, BS-IV, mandatory AC and old truck scrapping are perceived among the people, experts at companies like Ashok Leyland would have already predicted about the current developments. The next two months may witness an ocean of new trucks being driven on the Indian roads.

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