PPAP Automotive

PPAP Automotive reported a strong sequential recovery in Q4 FY26, with consolidated revenue growing by 18.6% year-on-year and 25.7% quarter-on-quarter to INR174.6 crores. EBITDA for the quarter increased by 12.9% year-on-year to INR16.9 crores, supported by improved business momentum and enhanced execution. Capacity utilization levels improved to approximately 78%. The company views Q4 FY26 as a significant turning point, reflecting positive outcomes of sustained efforts and strategic initiatives, despite overall FY26 consolidated revenue being INR567 crores.

The company announced three key strategic reforms. First, it successfully divested its stake in the joint venture PPAP Tokai India Rubber Private Limited for INR100 crores, realizing significant value against an investment of INR48.5 crores over 10 years. Second, the tooling business is proposed to be hived off into a wholly-owned subsidiary, Meraki Precision Tool Engineering Limited, with completion targeted by Q2 FY27. Third, the wholly-owned battery subsidiary, Avinya Batteries Limited, is proposed to be merged with the parent entity, PPAP Automotive Limited, targeted for completion by Q4 FY27. These initiatives aim to sharpen business focus, drive operational efficiencies, and enhance value creation.

The aftermarket business delivered robust growth of 36% year-on-year in FY26, driven by an expanding distribution network and diversified product portfolio. The tooling business improved utilization to over 90% and grew by 12.1% in FY26, developing 148 molds. The Industrial Products division also saw strong traction, growing 38% in FY26 through diversification into non-automotive and export markets. The battery business showed operational improvement, with revenue increasing 1.28x in FY26 compared to the previous year, and Q4 losses reduced to INR40 lakhs from INR1.2 crores last year, with a target for PBT profitability in FY27.

Despite Q4 performance, the company noted that demand conditions were softer than anticipated, leading to a variance against revised guidance. Profitability was impacted by mark-to-market losses on investments and a one-time^📎 employee benefit obligation of INR3.6 crores. Management expects overall margins for FY26 and FY27 to improve, driven by increased capacity utilization (targeting 80-82%) and operational efficiencies. However, due to the dynamic and volatile external operating environment, the company has deferred its FY27 financial guidance to the Q1 FY27 earnings announcement.

The proceeds from the JV divestment (INR100 crores) will strengthen reserves, reduce net debt to INR103 crores (gross debt around INR195 crores), and provide financial flexibility for strategic investments. Capex for FY27 will be funded through internal accruals. The Board recommended a final dividend of INR1.5 per equity share for FY26, bringing the total dividend for the year to INR2.5 per equity share, subject to shareholder approval, demonstrating a commitment to shareholder value creation.

The company secured new businesses worth approximately INR840 crores across EV and ICE platforms in FY26, including new customers like VinFast and Euler Motors, and programs with Kia and Mahindra. Management noted that many OEMs are launching new vehicles in FY27, with a shift towards SUVs. PPAP's content per vehicle ranges from INR2,500-3,500 on average, with some models going up to INR8,000-10,000 and others down to INR1,000. The company believes its new models, predominantly SUVs, will mitigate the impact of market changes from entry-level sedans.