Detailed Narrative
Q1 FY27 Performance Overview
Popular Vehicles and Services Limited commenced FY27 with an encouraging Q1, reporting a 44% year-on-year growth in revenue from operations to INR 1,890 crores. Reported EBITDA saw an 87% increase to INR 71.5 crores, with the EBITDA margin improving to 3.8% from 2.9% in the prior year. The company's reported PBT turned positive at INR 1.9 crores, a significant improvement from a loss of INR 11 crores in Q1 FY26, reflecting enhanced customer sentiment and demand.
Impact of Acquisitions and Geographic Expansion
FY27 marks the first full year of contribution from three businesses acquired in FY26: R.K.S. (Maruti operations), Globe CV (BharatBenz operations), and Olympus Motors (Audi operations). These acquisitions collectively contributed INR 9.4 crores positively to EBITDA in Q1 FY27. While R.K.S. and Olympus still showed negative P&L at INR 5.3 crores and INR 4 crores respectively, management expects them to achieve sustainable PAT-level profitability from Q2 onwards. The company also expanded its network with new service centers and sales facilities, including a JLR facility in Nagpur.
Segmental Performance Highlights
The Passenger Vehicles segment (excluding luxury) saw new vehicle volumes grow 83% and total income rise 73% to INR 836 crores. Commercial Vehicles reported a 41% increase in new vehicle volumes and a 33% rise in total income to INR 564 crores. The EV segment demonstrated strong growth, with new vehicle volumes up 153% and total income increasing 122% to INR 55 crores. Luxury Vehicles also experienced robust growth, with revenue up 42% and new vehicle volumes up 39%.
Aftersales and Service Business Focus
Aftersales remains a key focus area, with service income growing 11% in Passenger Vehicles and 47% in Commercial Vehicles, despite a 5% decline in PV service volumes due to rationalization of low-value job cards. Service volumes for acquired dealerships are gradually recovering, with management expecting them to be on track by Q4. The company is strengthening its spares and broader aftermarket business, leveraging existing infrastructure and customer relationships, and aims for double-digit Maruti service volume growth from Q2.
Inventory Management and Financial Discipline
The company maintained a disciplined approach to inventory, with new vehicle inventory days at approximately 32 days, significantly lower than 50 days a year ago. Despite a 14% year-on-year increase in absolute inventory, this was largely deliberate in preparation for the festive season and new model launches. Debt levels are higher due to FY26 acquisitions and network expansion, but financial discipline remains a priority, with a focus on higher utilization and better working capital efficiency.
Demand Outlook and Festive Season
Management expressed optimism for the demand environment, especially with the upcoming festive period. Inquiries are up approximately 20% year-on-year, and bookings have grown 22%. The GST reforms announced in September '25 continue to support affordability, particularly in the entry-level Passenger Vehicle segment. While the construction sector faces some demand challenges, other segments like small and light commercial vehicles are performing well.
Profitability and Margin Outlook
The company expects sequential margin improvement, targeting at least 4% blended EBITDA margin for Q2, Q3, and Q4 FY27. While the initial 5% blended EBITDA margin target for the year has been revised to 4.3-4.4% due to a higher contribution from lower-margin Commercial Vehicles, PV EBITDA margins are expected to inch upwards from 4%. Segmental EBITDA margins are projected at 15.5-16% for Maruti, 17-18% for JLR, 3.6-3.7% for CVs, and 3.4% for EV.