PPAP Automotive Limited

The Indian automobile industry experienced a subdued Q2 FY26, marked by uneven demand, shifting OEM production schedules, high inventory, and cautious retail sentiment. Against this backdrop, PPAP Automotive reported consolidated revenue of INR253.6 crores for H1 FY26, a 5.2% year-on-year decline. Consolidated EBITDA fell 21.9% year-on-year to INR22 crores, leading to a PAT loss of INR2.3 crores, with INR2.1 crores specifically from the battery business. Capacity utilization remained low in the part business at 65% and critically low at 5% for the lithium-ion battery pack facility.

Despite H1 challenges, PPAP Automotive secured lifetime orders worth INR621 crores in Q2, contributing to a total H1 FY26 inflow of INR707 crores, which includes INR16 crores from EV programs. The company's total lifetime order book now stands at INR4,171 crores, providing revenue visibility for the next 3 to 5 years in the automotive segment. This strong order book, coupled with new vehicle launches like Tata Altroz, Maruti Victoris, and Vinfast VF6, is expected to diversify offerings and strengthen OEM partnerships.

The Aftermarket business, operating under the Elpis brand, demonstrated strong growth, expanding 37% year-on-year in Q2. It currently has 133 distribution partners and offers 1,269 products, contributing approximately 5% to H1 revenue with an EBITDA margin of 7-8%. Management aims for this division to contribute 10% of consolidated revenues within the next two years. The Commercial Tool Room business (Meraki) also shows promise, with an order book of 138 molds worth INR30 crores and a target of over 20% growth this year, maintaining 85% capacity utilization. This division will become an independent company from Q4 FY26 for better governance.

The Avinya Batteries division faced significant headwinds, contributing INR2.1 crores to the H1 PAT loss and operating at only 5% capacity utilization. This was primarily due to delays in customer approval processes for marquee clients, pushing sales realization to Q3 instead of Q2. Management anticipates sales to improve in H2 FY26 and expects a reduction in losses, noting that INR15 crores in quarterly sales are needed for the division to break even operationally.

Looking ahead, PPAP Automotive expects a more positive H2 FY26, driven by festive demand, improving rural sentiment, and the impact of GST 2.0. New projects like Maruti Suzuki e Vitara, Tata Sierra, and Renault Duster are slated to begin full production, which will enhance capacity utilization. The company maintains its FY26 guidance for consolidated revenue between INR575-600 crores, EBITDA between INR60-65 crores, and PAT between INR10-12 crores. Medium-term targets include a 12-14% EBITDA margin and top-line growth exceeding market rates.