PPAP Automotive FY26: A Q4 recovery, a JV exit, and a group reset under the Ajay identity

PPAP Automotive Limited ended FY26 with a clear split screen. On one side, Q4 FY26 showed a strong sequential recovery as customer schedules stabilised and execution improved. On the other, the full-year outcome still reflected a softer operating environment, deferred orders in some verticals, and a margin impact from one-time employee benefit expenses linked to new labour codes.

On a consolidated basis, Q4 FY26 revenue rose to INR 174.6 crore, up 18.6% year on year and 25.7% quarter on quarter. EBITDA was INR 16.9 crore, up 12.9% year on year. Management said quarterly margins were impacted by around 2% due to a one-time employee benefit obligation arising from labour code changes.

The quarter also carried a large exceptional item. PPAP sold its entire 50% stake in its joint venture, PPAP Tokai India Rubber Private Limited, to Tokai Kogyo Co. Ltd. for INR 100 crore. The financials recorded an exceptional gain of INR 49.8 crore on the sale of the equity stake, which lifted reported profitability. Q4 FY26 consolidated PAT was INR 45.4 crore.

FY26 in numbers: steady revenue, softer EBITDA, exceptional-led PAT

For FY26, consolidated revenue came in at INR 567.1 crore versus INR 554.0 crore in FY25, a 2.4% increase. Gross margin improved to 44.0% from 42.8%, but EBITDA declined to INR 51.5 crore from INR 57.2 crore, and EBITDA margin moderated to 9.1% from 10.3%.

Management attributed the variance versus the revised guidance issued in January 2026 to a slower-than-expected demand pickup from automotive OE customers in the latter part of Q4, deferment of tooling revenue recognition due to customer order delays, and postponement of orders in battery and industrial products due to cost considerations and supply chain and logistics disruptions linked to the West Asia conflict. The presentation also cited moderation in consumer durables demand, partly impacted by a delayed onset of the summer season.

Despite weak operating leverage during the year, reported FY26 consolidated PAT improved to INR 43.2 crore, mainly because of the exceptional gain from the joint venture stake sale.

What changed strategically: restructuring and the Ajay Group identity

A major management message in both the presentation and the earnings call was organisational consolidation and sharper business focus. Going forward, PPAP and its subsidiaries will operate under a unified identity, the Ajay Group.

Alongside the rebranding, the company outlined a proposed group restructuring with three distinct actions.

First, the PTI joint venture exit is already completed, with a stated objective of strengthening reserves, supporting net debt reduction and creating flexibility for long-term strategic investments. Management noted that over nearly 10 years, PPAP had invested about INR 48.5 crore in the venture and generated limited financial returns, which framed the divestment as a value realisation event.

Second, the tooling business is proposed to be hived off into a wholly owned subsidiary under the Meraki Precision Tool Engineering name. Management said the transition is targeted by Q2 FY27, subject to regulatory and statutory approvals. The stated rationale is that tooling is a different operating model versus just-in-time parts manufacturing, and a separate entity would improve clarity, focus and scalability.

Third, the battery subsidiary Avinya Batteries Limited is proposed to be merged into PPAP Automotive Limited. Management said this is targeted by Q4 FY27, subject to approvals. The stated intent is operational synergies, better resource utilisation and a simpler structure that integrates the battery business into the broader group strategy.

Core business mix: parts dominate and customer concentration remains meaningful

The presentation disclosed that the parts business continues to dominate the revenue mix. In FY26, parts accounted for 92.4% of revenue versus 89.4% in FY25, while tools and others reduced to 7.6% from 10.6%.

Within the automotive parts business, customer concentration is visible. FY26 revenue mix by client was led by Maruti at 35.7%. Tata was 14.3%, SMG 10.7%, Honda 9.9%, Toyota 6.7%, Hyundai 3.2%, Renault plus Nissan 3.6%, MG Motors 2.0%, and others 14.0%.

This concentration is not unusual for an OEM-facing supplier, but it raises the importance of model cycles, SOP timing, and schedules at a few large customers. Management on the call explicitly linked FY26 revenue underperformance to model-specific trends and delays rather than a broad industry slowdown.

Orders and execution visibility: lifetime wins of about INR 840 crore

PPAP reported lifetime order wins of around INR 840 crore in FY26, including around INR 87.9 crore in Q4 FY26. The FY26 split was disclosed as around INR 68.2 crore from EV programs and INR 771.8 crore from non-EV programs.

A key highlight was a Tata Motors order with lifetime value of INR 460 crore. The company stated this covers plastic and rubber extrusion parts and will be executed over three to five years.

The company also mentioned the start of supplies for Tata Altroz, Tata Sierra, Maruti Victoris and Vinfast VF6 programs.

Segment updates from the call: aftermarket scaling, tooling utilisation, batteries nearing turnaround

While the presentation includes multi-segment descriptions, the concall provided operating colour on four non-core or emerging verticals.

In aftermarket, management said the business grew 36% in FY26. It highlighted an expanded distribution network of 147 distributors and a product portfolio of 1,264 SKUs across spare parts, service parts and accessories. Management also stated that the aftermarket has been growing at more than 25% CAGR over the past 3 to 4 years.

In tooling, management said utilisation improved to more than 90% in FY26 and the division developed 148 molds during the year. The investor presentation also stated an intent to enhance capacity up to 180 molds.

In industrial products, management said the division grew 38% in FY26, driven by traction in non-automotive applications and export markets.

In batteries, management said Q4 loss reduced to around INR 40 lakhs compared with around INR 1.2 crore in the comparable period last year, and it expects the battery segment to be profitable at PBT level in FY27 on a standalone basis.

Risks the company itself called out: raw material inflation and geopolitics

The biggest near-term risk highlighted on the call was raw material price inflation linked to supply chain disruptions. Management stated the priority is to avoid disruption to customer lines, and that supplier price increases are being paid. It also said about 50% of the impact is already covered with customers through pass-on mechanisms, while the balance is still being discussed given the fluid situation.

The presentation also pointed to deferment of customer orders in battery and industrial products due to supply chain and logistics disruptions linked to the West Asia conflict.

Takeaways

PPAP’s FY26 narrative is best understood as an operational recovery quarter sitting inside a year of uneven demand and execution timing challenges. The Q4 pickup in revenue and EBITDA suggests better throughput and stabilising schedules, while the exceptional gain from the PTI stake sale materially lifted reported profitability.

The larger strategic shift is the group reset under the Ajay identity, accompanied by a proposed corporate simplification. With the tooling hive-off targeted for Q2 FY27 and the battery merger targeted for Q4 FY27, the next few quarters will likely be as much about organisational execution as about OEM schedules.

Management said it will provide FY27 guidance after Q1 FY27 results. Until then, the most concrete signals remain the disclosed lifetime order wins, the customer mix, and the company’s stated focus on utilisation, value-added content per vehicle and scaling its newer verticals.