PPAP Automotive Limited

PPAP Automotive successfully completed the divestment of its 50-50 joint venture stake with Tokai Kogyo Company Limited, Japan, for INR100 crores. This strategic move was driven by a misalignment in long-term strategy and the JV's historical drag on consolidated financial performance, yielding almost zero return on the INR48.5 crores invested capital. The proceeds will be utilized to reduce net debt and fund strategic capital expenditure, with an expected 30% reduction in interest costs, strengthening the balance sheet and enhancing financial flexibility. Long-term loans will be repaid as per schedule over the next 2-3 years.

For Q3 FY26, consolidated revenue from operations stood at INR138.9 crores, broadly in line with the previous year, while PAT turned positive at INR6.61 lakhs, compared to a loss in the preceding quarter. However, the 9-month FY26 consolidated revenue declined marginally by 3.5% to INR392.47 crores, with a PAT loss of INR225 lakhs. This subdued performance was primarily attributed to demand softness from specific OEMs and model-specific issues, including underperforming models from Maruti, Tata (Curvv), and Honda, where PPAP had higher exposure. Management noted that capacity utilization was low and manpower costs were high in Q3 due to anticipated higher volumes that did not materialize.

PPAP is actively pursuing diversification beyond its core automotive OEM business. The aftermarket business, operated under Elpis Automotive, grew over 30% YoY, targeting 10% of the top line and aiming for INR5 crores in monthly recurring revenue next year. The commercial tool room business maintains healthy utilization, and the industrial products division is expanding into non-automotive applications, particularly in export markets. The lithium-ion battery pack business, Avinya Batteries, achieved its highest monthly sales in Q3 FY26, showing a turnaround with expectations of record sales and reduced losses in the current quarter, driven by market cleanup and the upcoming mandatory e-Rickshaw battery conversion from April 2027.

The company incurred INR37 crores in capital expenditure during the first nine months of FY26, against a full-year plan of INR55 crores. A significant portion of this is allocated to the Chennai plant, where the first phase of EPDM rubber business expansion, costing approximately INR30 crores (including building), is underway and expected to be ready by April 2026. This expansion aims to offer better technological and competitive local solutions to customers and supports the company's strategic flexibility to pursue independent growth initiatives. The company also plans to strengthen financial prudence and governance of its commercial tool room business by operating it under a wholly owned subsidiary, Meraki Precision Tools Limited, from Q4 onwards.

PPAP Automotive projects FY26 revenues of approximately INR575 crores, with an estimated EBITDA of INR58 crores and a PAT of INR8 crores (excluding the extraordinary gain^📎 from the JV sale). Management expressed confidence in achieving these targets, noting a gradual ramp-up in volumes and normalization of demand trends in the current quarter. Guidance for FY27 will be provided in March 2026 after the Board meeting, following the processing of all required information. The company remains confident that the structural actions taken over the past few years will strengthen operating performance and enhance financial resilience.