PPAP Automotive Limited Q2 FY26 Update

• The company saw negative growth this quarter on a YoY basis.
• When compared to Q1 FY 26, there was growth in revenues as well as EBITDA, with revenues up 17.09%.
• Net profit is slightly better but still negative

Our consolidated revenue from operations stood at INR 253.6 crores in the first half of the financial year ‘26, down by 5.2 % on a year-on-year basis.

Our consolidated EBITDA stood at INR22 crores in the first half, down 21.9% YoY.

PAT reported a loss of INR 2.3 crores for the first half, which included a loss of INR 2.1 crores attributed to the battery business itself

• Passenger cars saw a decline in sales of about 1.5% while UVs saw a decline of 2.1%. Since PPAP gets a major share of its revenues from this sector, the decline affected PPAP sales.

“The Indian automobile industry remained subdued through most of quarter 2 …Demand remained uneven across segments impacted by the shifting of OEM production schedules, high inventory levels and cautious retail sentiment….& proposed GST reforms, which were slated to be introduced by the end of September.”

• The battery business is in its infancy, and some sales did not materialise as expected due to delays in approval. The management informed the same during the conference call:

“due to certain delays in approvals, the sales could not be fully realised during the quarter. However, we expect the sales situation to improve in the second half of this year and anticipate a reduction of losses going forward.’
The total PAT loss for H1 is around 2.3 crores, out of which 2.1 crores is the loss from the battery business. This exacerbated the loss further.

PPAP shows promise and is not easy to write off due to a number of industrial and macroeconomic factors.The company has a good history of working with large OEMs. Some of the factors to consider include:

• Indian Automotive sector rebounding with structural changes due to new GST regime. As a result, Q3 shows a lot of promise. The most recent festive season saw 78% of the cars sold being sub 10 lakh rupees, with total car sales registering a growth of 40.5% YoY. This should translate into a revenue rise of similar kind for PPAP. Here’s what management has to say:

“In the second half of this year, we have three new projects which are going to start….
Maruti Sukuzi e Vitara,that was launched in quarter 2, but the full production is going to start in quarter 3…….
Tata Sierra, that is expected to start production thismonth in November.
And in the next quarter, quarter 4, you must have heard about Renault Duster being launched in the Indian market.”

• Order from TATA: New order from Tata worth INR 460 crores signed for the supply of both plastic and rubber extrusion parts. The company booked lifetime order of ~INR 621 Crore in Q2FY26. So the sales might have been muted, new orders scaled greater heights.
• GST Reforms: The GoI reduced GST on sub 1200cc and 1200cc-1500cc cars which is likely to enhance sales volume in turn leading to higher business volume for PPAP. GST for 2-wheelers below 350cc has also been reduced. The management was upbeat on the same:

“Industry outlook appears more positive, supported by the festive demand, improving rural sentiment and the impact of GST 2.0and monetary easing measures. With consumer confidence gradually improving, the sector is expected to witness a steady pickup in demand through the rest of the year.”

• Revenue Guidance: The management seems very confident on INR 575 crores to INR 600 revenue guidance for the financial year. This means that H2 is expected to yield somewhere around INR 320-370 crores in sales which is good performance. The management detailed this somewhat in the concall:

“In light of all these developments in various businesses and various divisions, we see a visibility of achieving a consolidated revenue for financial year ‘26 in the range of INR575 crores to INR 600 crores, EBITDA in the range of INR 60 crores to INR 65 crores and PAT in the range of INR 10 crores to INR 12 crores.”