PPAP Automotive Q1 FY27: Growth accelerates, margins wait for raw material relief

PPAP Automotive Limited began FY27 with a sharp rebound in scale. In Q1 FY27, consolidated revenue from operations rose to INR 156.4 crore, up 34.1 percent year on year. Consolidated EBITDA increased 33.3 percent to INR 12.4 crore. The quarter also marked a return to profit, with consolidated PAT at INR 0.9 crore compared to a loss of INR 2.3 crore in Q1 FY26.

The company attributed the performance to higher customer production schedules, healthy demand across vehicle segments, ramp-up of new programs, and improved operating leverage. The broader industry environment was supportive. The investor presentation cited SIAM data showing record first quarter volumes across passenger vehicles and commercial vehicles, along with strong export momentum.

Orders, customers, and the near-term growth engine

A key operational data point in the quarter was order inflow. PPAP disclosed lifetime order wins of about INR 131 crore in Q1 FY27, representing a 51.8 percent year on year increase. The inflow was evenly balanced between EV and non-EV programs, with EV orders at about INR 64.4 crore and non-EV orders at about INR 66.1 crore. Management highlighted that this mix improves long-term revenue visibility, while keeping the portfolio balanced across EV and ICE platforms.

The Q1 FY27 revenue mix also underscored customer concentration and platform exposure. Maruti Suzuki contributed 31.2 percent of Q1 FY27 revenue. Hyundai accounted for 17.4 percent. Toyota contributed 14.2 percent and Tata Motors 10.6 percent. The balance came from Honda, MG Motors, SMG, Renault plus Nissan, and other customers.

The company’s segmental revenue breakup for Q1 FY27 remained dominated by the parts business. Parts contributed 94.4 percent of revenue, while tools and others contributed 5.6 percent.

Margin pressures and the timeline for recovery

Despite higher volumes and better capacity utilization, margin expansion remained capped. Management pointed to raw material inflation driven by geopolitical developments, stating that raw material costs increased by about 4 percent. They indicated that about 2 percent was passed through to customers, with the remaining increase under discussion. Management expressed confidence that the balance could be settled by the end of Q2 FY27 or early Q3 FY27, which would then reflect in EBITDA margins.

In response to questions on long-term margin potential, management said that returning to pre-COVID margin levels is difficult in the current competitive and cost environment. They indicated that a sustainable EBITDA margin range for auto ancillary businesses like PPAP is about 12 to 13 percent, implying that margin recovery is expected to be gradual and linked to utilization and cost pass-through outcomes.

Strategy updates: Hutchinson partnership and portfolio expansion

The most notable strategic development was PPAP’s technology partnership with Hutchinson, described as a global leader in automotive sealing systems. The presentation highlighted an exclusive license to manufacture, market, and sell advanced body sealing systems in India, supported by access to Hutchinson’s proprietary technologies, licensed know-how, and engineering expertise.

During the earnings call, management clarified that the arrangement is a technology partnership and not a joint venture. The initial product focus is primarily on the glass run channel, while also covering existing sealing products. Management said customer engagements are underway and expects clarity on revenue contribution by the end of FY27, suggesting that commercial benefits are likely to accrue after development and customer adoption cycles.

The company also outlined priorities across business verticals. In the parts business, PPAP aims to increase content per vehicle through value-added products and expand exports, which have commenced to the USA, while exploring opportunities in GCC countries. In the aftermarket business, management reiterated an ambition to take the division to about 10 percent of overall revenue over the next 2 to 3 years, supported by SKU expansion and distribution strengthening.

Aftermarket, tooling, batteries: scaling, restructuring, and risk management

The aftermarket business, operated through Elpis Automotive Parts, continued to show traction. Management stated that aftermarket revenue grew 30 percent year on year in Q1 FY27. During the quarter, the business launched 345 new SKUs, taking total SKUs to 1,312, and expanded the distributor network to 155. Management said the segment contributes around 6 percent of overall revenue currently and is expected to continue growing at about 30 percent annually.

On the tooling side, management reported capacity utilization of 84 percent, with orders for 30 molds received in Q1 and a pipeline of 124 molds. The company intends to increase tooling output by 20 percent in FY27. Structurally, the tooling business is proposed to be hived off into a wholly owned subsidiary, Meraki Precision Tools Engineering Limited, with independent operations expected from Q3 FY27.

The battery business showed revenue growth but remained operationally challenging. Management stated that raw material costs, pricing pressure, and shorter delivery timelines continue to affect the business, and the near-term focus is on minimizing losses. Separately, the company has initiated the merger of Avinya Batteries Limited into PPAP, which management expects to complete by Q4 FY27 as part of simplification and efficiency improvement.

A related capital allocation datapoint emerged from the discussion on the sale of the joint venture stake. Management disclosed proceeds of about INR 100 crore. About INR 8 crore was used for taxes, around 25 percent of the remaining amount would be retained for working capital, and the balance would be used for strategic capex. Management indicated FY27 capex focus areas include EPDM capability expansion, toolroom expansion, and land requirement in the west region near Sambhaji Nagar.

What to track from here

PPAP’s Q1 FY27 performance reinforced that the company has entered a stronger growth phase, supported by improving industry volumes and a ramp-up across OEM platforms. The order win momentum and the expanding aftermarket footprint add to medium-term visibility. At the same time, profitability remains sensitive to raw material inflation and the timing of cost pass-through settlements.

The next milestones are clear from management commentary: settling pending raw material claims by end Q2 or early Q3, executing EPDM capacity additions through FY27, completing the tooling business restructure by Q3 FY27, and progressing the Avinya Batteries merger by Q4 FY27. Management also stated a target to be net debt free within three years. The quarter set a strong baseline, but the durability of earnings improvement will depend on how quickly cost pressures ease and how well new initiatives translate into measurable revenue and margins.