PPAP Automotive Navigates H1 FY26 with Strategic Wins Amidst Industry Headwinds

PPAP Automotive Limited, a prominent manufacturer of automotive sealing systems and interior/exterior parts, reported a challenging yet strategically active first half of fiscal year 2026. The company's consolidated revenue from operations stood at INR 253.6 crore, marking a 5.2% year-on-year decline. This period also saw a consolidated EBITDA of INR 22.0 crore, down 21.9% from the previous year, and a consolidated net loss after tax (PAT) of INR 2.3 crore. The primary drivers for this underperformance were subdued OEM offtake, delayed project ramp-ups, and significant initial losses from the nascent lithium-ion battery business.

Despite these headwinds, PPAP Automotive demonstrated resilience by securing a robust lifetime order book valued at INR 4,171 crore by the end of H1 FY26, providing substantial long-term revenue visibility. A notable achievement was a significant order from Tata Motors worth INR 460 crore for plastic and rubber extrusion components, slated for execution over the next three to five years. The company also commenced supplies for new programs like Tata-Altroz, Maruti-Victoris, and Vinfast-VF6, reinforcing its relationships with key OEMs and expanding its footprint across both internal combustion engine (ICE) and electric vehicle (EV) segments.

Segmental Performance and Strategic Initiatives

The automotive parts business, the company's core segment, experienced volume softness due to shifting OEM production schedules and delayed project ramp-ups. However, gross margins improved to 45.4% in H1 FY26, up from 43.5% in H1 FY25. This margin expansion was attributed to a higher share of in-house manufactured tools, a better product mix, and stable raw material costs, demonstrating operational efficiency despite lower volumes.

The aftermarket business, operating under the Elpis brand, continued its growth trajectory, expanding its product offering to 1,269 SKUs and actively engaging 133 distribution partners. This segment grew 37% year-on-year in Q2 FY26, with management targeting it to contribute 10% of the consolidated revenues by FY27. The commercial tool room business, Meraki, also showed strong performance, securing orders for 106 molds in Q2 FY26 and maintaining an 85% capacity utilization rate. This division is projected to achieve over 20% growth this year.

Conversely, the lithium-ion battery business, Avinya Batteries, faced significant challenges. Operating at a mere 5% capacity utilization, it incurred a loss of INR 2.1 crore in H1 FY26. Management attributed this to delays in customer approval processes, which pushed anticipated sales from Q2 to Q3. Despite this, the company remains committed to this segment, focusing on storage applications for solar, telecom, and UPS batteries, and leveraging its in-house design and development capabilities.

Outlook and Growth Drivers

Looking ahead, PPAP Automotive anticipates a gradual and steady recovery in the second half of FY26. This optimism is fueled by improving market conditions, festive demand, and the ramp-up of new projects. The company has revised its full-year FY26 guidance, projecting consolidated revenue between INR 575-600 crore, EBITDA between INR 60-65 crore, and PAT between INR 10-12 crore.

Key growth drivers for margin expansion include optimizing existing assets, softening raw material prices, improving material yield ratios, and focusing on margin-accretive products. The company's strategic priorities for the automotive parts business involve increasing content per vehicle through value-added products, timely execution of its robust order book, and expanding exports to new geographies like the USA and GCC countries. For the tooling business, the focus is on enhancing capacity to 150 molds and ramping up utilization to achieve operating leverage.

PPAP Automotive's commitment to sustainability is also evident in its FY25-26 targets, which include a 10% reduction in Scope 1 & 2 emissions, a 10% increase in renewable energy usage, and a 15% increase in women's diversity in the workforce. These initiatives underscore a holistic approach to long-term value creation.

Conclusion

PPAP Automotive Limited is navigating a period of transition, marked by initial setbacks in its new battery venture and broader industry softness. However, the company's strong order book, improved gross margins, and strategic focus on high-growth segments like aftermarket and industrial products, coupled with new project ramp-ups, position it for a stronger second half. Management's transparent acknowledgment of challenges and proactive revision of guidance reflect a disciplined approach to execution and a clear vision for sustainable growth across its diversified portfolio.