Detailed Narrative
Strategic Acquisitions and Divestments
Popular Vehicles successfully expanded its footprint through two key acquisitions. It acquired the authorized Maruti Suzuki dealership of R.K.S Motors Private Limited in Telangana for approximately INR 90 crores, effective October 15, 2025. Additionally, the company completed the acquisition of BharatBenz's dealership of Globe CV Private Limited in Punjab for approximately INR 12 crores. To sharpen its portfolio focus, the company divested its Piaggio and Honda businesses (Kuttukaran Green Private Limited and Vision Motors Private Limited), which resulted in an exceptional gain📎 of INR 15.3 crores.
Q2 FY26 Financial Performance Overview
For Q2 FY26, Popular Vehicles reported a total income of INR 1,534.6 crores, marking a 16.6% quarter-on-quarter increase and a 1.1% year-on-year growth. EBITDA stood at INR 49.4 crores, up 29.1% QoQ but down 16.5% YoY, with an EBITDA margin of 3.2%. After adjusting for a cess provision, adjusted EBITDA was INR 53 crores (3.5% margin). PAT for the quarter was INR 0.6 crores, a significant decline from INR 7.6 crores in Q2 FY25, but an improvement from a loss of INR 8.8 crores in Q1 FY26.
Impact of GST Rate Revision and Inventory Management
The Q2 performance was influenced by discussions around a potential GST rate revision in August, which led to customers postponing purchases, particularly in the mass segment. This created a timing shift rather than a demand deterioration. Inventory levels, which were deliberately built up for the festive season, have since normalized, coming down to approximately 34 days in October from earlier levels of 75-85 days. This normalization is expected to reduce interest costs and improve OEM incentives.
Cess Provision and Tax Impact
The company accounted for a cess provision of INR 3.6 crores in Q2 FY26 due to ongoing uncertainty and lack of clarity from the government. A writ petition has been filed in the Supreme Court by the Federation of Automobile Dealers Association regarding this issue. The higher tax for the quarter was attributed to profits generated by subsidiaries, which were partially offset by deferred tax assets from loss-making units, resulting in an INR 11 crores tax figure.
Service Business and Digital Initiatives
While overall service volumes saw a slight decline of 7% QoQ in the passenger vehicle segment, the company expects a recovery, with October showing strong retail numbers. Management anticipates organic service volume growth of 2-3% for FY26, increasing to 4% including acquisitions, and double-digit growth for FY27. Popular Vehicles is also building a stronger digital and retail parts ecosystem through ZPAREX Digisolutions Private Limited, aiming for an EBITDA margin of 7-8% by year-end for this segment, with expectations of higher margins than physical retail in 3-5 years.
Luxury Car Segment and Future Outlook
The luxury car market demonstrated resilience, being less price-elastic to GST reductions. However, the JLR business faced challenges in Q2 due to a cyberattack impacting supply. Management expects JLR deliveries to normalize by January-March 2026. For FY26, the company projects a total passenger car business volume growth in double digits, combining 6% organic growth and an additional 6-7% from acquisitions (approximately 2,500 vehicles). The company aims to achieve FY24 PAT levels by FY27.