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    Popular Vehicles and Services Limited

    PVSL
    Automobile and Auto Components·18 Aug 2025
    Management Summary

    Popular Vehicles faced a challenging Q1 FY26 with a reported loss and declining EBITDA, primarily due to industry slowdown and weak demand. However, the company demonstrated resilience through cost control, strong growth in EV and luxury segments, and strategic expansion into new geographies and brands. Management is focused on debt reduction and expects improved performance in H2 FY26, contingent on GST clarity.

    Highlights

    6
    • Total income grew 1.3% YoY to ₹1,316 crores in Q1 FY26, from ₹1,298 crores in Q1 FY25.

    • EV revenue increased by 97.7% YoY to ₹26.8 crores in Q1 FY26, from ₹13.6 crores in Q1 FY25.

    • Pre-owned vehicle segment volumes grew 4.2% YoY to 2,575 units, with income up 10.2% to ₹93 crores.

    • Service business income grew 4.5% YoY to ₹227 crores, capturing a higher wallet share and improving ASPs.

    • Received LOI for 8 state-of-the-art 3S facilities in Punjab for Bharat Benz, marking entry into a new state.

    • Received LOIs for Chennai (2 locations) and Bangalore (2 locations) for Ather, expanding EV network.

    Concerns

    5
    • EBITDA decreased by 26.3% YoY to ₹38.3 crores in Q1 FY26, from ₹52 crores in Q1 FY25.

    • Reported a loss of ₹8.8 crores in Q1 FY26, compared to a PAT of ₹5.4 crores in Q1 FY25.

    • New vehicle sales volume de-grew 1.5% YoY to 9,532 units.

    • Gross margins dropped from 15-16% to 13.4-13.5% at group level, with Piaggio margins falling from 18% to 14%.

    • Debt position is currently 'a little on the higher side' at ₹540 crores.

    What Changed1

    vs Q2 FY26

    Guidance items11 → 7 (-4)

    Key financials

    Single quarter

    08 metrics
    1. 01Total Income₹1,316 Cr+1.3%YoY
    2. 02EBITDA₹38.3 Cr-26.3%YoY
    3. 03EBITDA Margin2.9%
    4. 04PAT₹-8.8 Cr
    5. 05New Vehicles Sold Volume9,532 units-1.5%YoY

    Segment breakdown

    New Vehicle Sales
    ₹932 Cr Income0.1% YoY Growth9,77,000 Rs Average Selling Price1.6% ASP YoY Growth
    Pre-owned Vehicle Sales
    ₹93 Cr Income10.2% YoY Growth3,62,000 Rs Average Selling Price5.7% ASP YoY Growth
    Services
    2,53,851 vehicles Volume0.2% YoY De-growth
    Spare Parts Distribution
    ₹64 Cr Income1.8% YoY Growth
    Revenue Mix by Vertical (Q1 FY26)
    55% Passenger Vehicles38% Commercial Vehicles2% EV 2-wheeler5% Spare Parts Distribution
    Revenue Mix by State (Q1 FY26)
    58% Kerala26% Tamil Nadu11% Karnataka5% Maharashtra
    List

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Gross ₹540 crores

    Cost 8.0%

    M&A

    Honda and Piaggio business

    divestment · pending regulatory · Consideration ₹NaN (cash)

    M&A

    Telangana acquisition

    acquisition · announced · Consideration ₹NaN (undisclosed)

    Guidance & targets

    7
    CategoryTargetPriority
    Revenue
    Turnover
    ₹11,000 crores
    High
    Profitability
    EBITDA Margin
    closer to 6%
    High
    Profitability
    EBITDA Margin (excluding new acquisitions)
    4% to 4.5%
    Medium
    Profitability
    EBITDA Margin
    about 5%
    Medium
    Debt
    Debt Reduction
    5% to 6% reduction from ₹540 crores
    Medium
    Debt
    Blended Cost of Debt
    below 8%
    Medium
    Inventory
    Inventory Days
    upward 37 days
    Medium

    Debt reduction

    by Q3 FY26
    Current₹540 crores
    Target5-6% reduction from ₹540 crores

    Why it matters

    Management committed to reducing debt, which is currently 'a little on the higher side', impacting financial health.

    We are currently at around INR540 crores in terms of the debt that we're looking at. We are trying to bring this down by at least 5% to 6% in terms of the numbers. our debt is a little on the higher side, but we are expecting this to come down by Q3 of this year.

    How to verify

    capital_allocation.debt.gross_debt

    Risks & concerns

    4
    RiskSeverity

    Challenging auto industry environment, especially small car segment

    The last 12 to 15 months have been challenging for the auto industry and particularly the small car scenario.Management acknowledged

    medium

    Weak demand momentum in domestic passenger vehicle segment

    FY '26 began with several uncertainties for the domestic passenger vehicle segment, with demand momentum remaining weak.Management acknowledged

    medium

    Uncertainty regarding GST announcements and their impact on Q2 margins

    Q2, I think with the announcement of the GST and all that, we're just going to evaluate how that would play out for the entire festival season for us in Kerala. So Q2, unless we get clarity on that, it will be tough to estimate in terms of how the margins will play out in Q2.Management acknowledged

    high

    Higher interest rates in subsidiaries contributing to higher blended cost of debt

    primarily because of the higher interest rates in the subsidiaries that we have, but this is expected to come down to below 8% in this quarter.Management acknowledged

    low

    Q&A highlights

    8

    “On the Maruti side of the business, we've been able to bring down the discounts by almost 50% compared to Q4 of last year. On the Arena business, the average discount for the 3 months of Q4 was averaging around INR12,000, which we were able to bring down to about INR5,500 to INR6,000 range. Nexa was running around approximately INR15,000 per car. We've been able to bring that down to between INR7,500 to INR8,000 per car, Q1 over Q4.”

    Provides specific figures on discount reduction, indicating improved pricing power or reduced competitive pressure in Q1 FY26.

    asked by Preet

    3 min read7 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Impacted by Industry Headwinds

    Popular Vehicles reported a challenging Q1 FY26, with total income growing marginally by 1.3% YoY to ₹1,316 crores. The company recorded a loss of ₹8.8 crores, a significant decline from a PAT of ₹5.4 crores in Q1 FY25. EBITDA also saw a substantial decrease of 26.3% YoY to ₹38.3 crores, with the EBITDA margin at 2.9%. Management attributed this performance to a prolonged slowdown in the auto industry, particularly the small car segment, and weak demand momentum, with April showing a marginal uptick but May and June remaining subdued.

    02

    Strategic Expansion and Diversification Initiatives

    Despite the challenging environment, Popular Vehicles is actively pursuing strategic expansion. The company secured a Letter of Intent (LOI) to establish eight 3S facilities for Bharat Benz in Punjab, marking its entry into a new state with a cumulative investment of approximately ₹12 crores. Additionally, LOIs were received for Ather in Chennai (₹75 lakhs investment) and Bangalore (₹1.2 crores investment), expanding its EV footprint. These initiatives are part of a broader strategy to diversify revenue contribution from Kerala to below 50%.

    03

    Mixed Segmental Performance with Strong EV and Luxury Growth

    The new vehicle segment experienced a 1.5% YoY volume de-growth, but the average selling price increased by 1.6% to ₹977,000. The pre-owned vehicle segment showed positive development with volumes up 4.2% YoY and income up 10.2% to ₹93 crores, with ASP increasing by 5.7% to ₹362,000. The EV 2-wheeler segment demonstrated strong growth, with revenue increasing by 97.7% YoY to ₹26.8 crores. Services income grew 4.5% to ₹227 crores, despite a slight volume de-growth of 0.2%, by capturing a higher wallet share and improving ASPs.

    04

    Cost Control and Margin Management Efforts

    In response to market challenges🌐, Popular Vehicles implemented effective cost control measures. Discount levels for Maruti Arena and Nexa were reduced by almost 50% compared to Q4 FY25, with Arena discounts dropping from ₹12,000 to ₹5,500-₹6,000 and Nexa from ₹15,000 to ₹7,500-₹8,000 per car. The company also undertook cost restructuring on the employee side. These efforts contributed to an improvement in operating margins and a reduction in losses compared to Q4 FY25, though overall EBITDA declined YoY.

    05

    Debt Management and Divestment Plans

    The company's current debt stands at approximately ₹540 crores, which management aims to reduce by 5-6% by Q3 FY26. The blended cost of debt is currently 8-8.2% but is expected to fall below 8% in Q2 FY26 due to lower RBI rates. Popular Vehicles is also divesting its Honda and Piaggio businesses, expecting to receive approximately ₹70 crores by the end of August 2025. These funds will be strategically utilized for new acquisitions, expansion, or debt reduction.

    06

    Long-term Vision and FY26/FY27 Margin Outlook

    Popular Vehicles reiterated its long-term vision to double turnover to ₹11,000 crores within 3.5 to 4 years from the current ₹5,600 crores, implying an 18-20% CAGR. The company also aims to increase its EBITDA margin from FY24's 5% to closer to 6% within the same timeframe. For FY26, excluding new acquisitions, EBITDA margins are projected to be 4-4.5%, improving to 5% by FY27. Management expressed optimism for Q3 and Q4, anticipating high growth driven by new GST norms.

    07

    Inventory Management and Impairment Reversal Expectation

    The company successfully reduced its overall inventory by approximately 500 units in June, bringing the inventory days to 45-46. The target is to further reduce this to 37-38 days by the end of September. An impairment loss of ₹3 crores was recorded in Q1 FY26, which management clarified as a provision for outstanding debtors. They anticipate a reversal of this provision in Q2 FY26 due to rigorous collection efforts, which would positively impact profitability.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.