Popular Vehicles and Services Q4 FY26: Growth Returns, But Integration Costs Still Bite

Popular Vehicles and Services Limited closed FY26 with a strong top line, helped by demand recovery, network expansion, and acquisitions. In Q4 FY26, consolidated revenue from operations rose to INR 1,754.5 crore, up 27.8% year on year. For FY26, revenue from operations grew 15.2% to INR 6,381.1 crore.

Operating profitability also improved, though from a low base. Q4 FY26 EBITDA nearly doubled to INR 57.5 crore from INR 29.7 crore a year ago. FY26 EBITDA increased 16.0% to INR 203.4 crore. Despite this, profitability remained negative. FY26 profit after tax was a loss of INR 12.5 crore, compared with a loss of INR 10.5 crore in FY25.

A key FY26 housekeeping item was the company’s clarification that its April 2026 business update had misstated Q4 year-on-year revenue growth due to a calculation error during data consolidation after multiple acquisitions. The company stated that full-year growth numbers were broadly in line with the earlier disclosure, and that new vehicle sales volume growth numbers were unchanged.

Segment performance: CV and EV accelerate, PV improves on volume but faces mix issues

The company’s growth in FY26 was led by new vehicle sales across segments. Passenger vehicles (PV) showed a recovery in volumes, supported by stronger consumer sentiment in the second half of the year, which management linked to GST reforms announced in September 2025. Commercial vehicles (CV) delivered the most robust growth, and the electric two-wheeler business continued to scale quickly.

In FY26, PV new vehicle volumes were 32,752 units and segment total income was INR 2,551 crore, both up 9% year on year. CV new vehicle volumes grew 30% to 12,546 units, while income increased 32% to INR 2,125 crore. EV new vehicle volumes rose 89% to 8,154 units, and income grew 72% to INR 137 crore.

In Q4, the pattern was similar. PV demand improved, especially in entry-level vehicles, but revenue growth was moderated by product mix and supply constraints in Kerala. CV continued to outperform with volume and income growth. EV volumes expanded sharply, driven by Ather’s growing acceptance and network expansion.

Financial summary (consolidated)

Aftersales: PV volumes down, but revenue resilient; CV services strong

Aftersales remains central to management’s margin-improvement narrative. The company highlighted that services, repairs, and spare parts distribution together accounted for 19% of revenue but 62% of EBITDA in FY26, compared with new vehicles contributing 75% of revenue but only 37% of EBITDA.

However, the PV service business saw a decline in volumes. FY26 PV service volumes fell 12% to 7,39,794 units, while PV service income declined only 2% to INR 607 crore. Management attributed the volume decline partly to rationalisation of low-value job cards and moderation in throughput, while stating that better realizations and higher-value repair work helped protect revenue.

CV services continued to perform strongly. FY26 CV service volumes increased 10% to 2,02,647 units, and income rose 28% to INR 351 crore. EV services are still small in value terms, but show early recurring potential as the installed base grows. FY26 EV service volumes increased 79% to 39,659 units, and income rose 18% to around INR 9 crore.

Strategy and execution: acquisitions, geography diversification, and new adjacencies

FY26 was also a year of significant portfolio action. The company completed three acquisitions: Globe CV in Punjab (BharatBenz), R.K.S. Motor in Telangana (Maruti Suzuki), and Olympus Motors (Audi) in Telangana and Andhra Pradesh. It also divested the Honda and Piaggio businesses in August 2025 and stated that proceeds were deployed towards acquisitions to improve capital allocation.

Management linked these actions to two objectives articulated at the time of IPO: increasing revenue from non-Kerala markets and expanding the service revenue base. On geographic diversification, it reported non-Kerala revenue contribution rising to about 47% in FY26 from about 28% in FY23, and stated an aim to reduce Kerala contribution below 50% by Q1 FY27.

On new adjacencies, the company commenced BKT tyre distributorship in Kerala and Karnataka for two-wheeler and passenger car radial segments in Q4 and launched Yanik under ZPAREX Digisolutions as a spare parts and accessories e-commerce platform.

Profitability: adjusted metrics improve, but leverage rises

While reported EBITDA improved, the company emphasized adjusted profitability to explain FY26 performance amid acquisitions and divestments. It reported adjusted EBITDA of INR 200.9 crore versus INR 157.7 crore in FY25, a 28% increase, after adjusting for specified items. It also stated that adjusted PBT before exceptional items turned positive at INR 8.8 crore.

Balance sheet expansion was visible. Total assets rose to INR 2,383.3 crore at March 2026 from INR 1,904.6 crore at March 2025. Total borrowings in key ratios increased to INR 696.1 crore in FY26 from INR 423.1 crore in FY25. Net Debt to EBITDA increased to 3.1x in FY26, and ROCE declined to 5.7%.

Cash flow remained positive but moderated. Net cash from operating activities was INR 100.2 crore in FY26, compared with INR 150.8 crore in FY25, with a negative working capital change of INR 65.1 crore.

What management guided for FY27

In the earnings call, management provided explicit targets for FY27. It said the company aims for high double-digit top line growth and consolidated EBITDA margin moving toward the 5% range (about 4.8% to 5%). It also stated that PAT should approach FY24 levels as scale benefits and integration benefits begin to reflect.

On timing, management indicated profitability improvement from Q2 FY27, including at PAT level for both standalone and consolidated performance.

Takeaways

FY26 shows a clear rebound in revenue and volumes, with commercial vehicles and EVs providing momentum and acquisitions expanding the company’s geographic footprint. But the profitability reset is still incomplete. Higher borrowings, integration costs, and the decline in PV service volumes continue to weigh on reported results.

FY27 becomes the year of delivery. Management’s own markers are clear: consolidate acquisitions, lift service volumes and realizations, tighten working capital, and expand consolidated EBITDA margins toward 5%. The next few quarters will test whether the expanded footprint can translate into sustained profitability, not just scale.