Event Participants
Executives
2 Abhishek Jain, Sachin Jain
Analysts
4 Hardik Chheda, Mihir Shah, Saket, Tanya Desai
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹156.4 crores | +34.1% YoY; driven by higher customer production schedules, new program ramp-ups, and improved capacity utilization |
| EBITDA | ₹12.4 crores | +33.3% YoY; margin ~7.9% impacted by raw material inflation, partially offset by operating leverage |
| Capacity Utilization (Overall) | 73% | Q1 FY27 level; tooling segment utilization at 84%; scope for margin improvement as volumes scale |
| Lifetime Orders Won | ₹131 crores | +51.8% YoY; EV programs contributed ₹64 crores (~49% of total orders) |
| Aftermarket Revenue Growth | +30% YoY | 345 new SKUs added in Q1; total portfolio 1,312 SKUs vs 1,264 at end FY26; 155 distributors; ~6% of total revenue |
| Raw Material Cost Impact | ~4% cost increase | ~2% passed on to customers; remaining ~2% under negotiation, expected settlement by end Q2/start Q3 FY27 |
Geographic & Segment Commentary
Automotive Parts (OEM): Largest revenue contributor, supported by record industry Q1 sales - PV at 1.27 million units (+25% YoY), 2W +20.3%, CV +18.3%, 3W +29.7%, and strongest-ever Q1 vehicle exports. Secured lifetime orders of ₹131 crores (+51.8% YoY) including ₹64 crores from EV programs; Mahindra Tier 1 sealing product SOP commences Q3.
Aftermarket: Revenue grew 30% YoY; launched 345 new SKUs taking portfolio to 1,312, expanded distributor network to 155. Management targeting ~10% revenue contribution (from ~6% currently) through portfolio expansion, deeper distribution, and new west-India warehouse.
Tooling: Capacity utilization at 84%; received orders for 30 moulds in the quarter with pipeline of 124 moulds. FY26 output was 148 moulds; FY27 target is +20% output. Hive-off to Meraki Precision Tools Engineering Ltd expected by Q3 FY27.
Industrial Products: FY26 revenue grew 38%; Q1 FY27 moderated due to seasonality; ~30% of quarterly revenue from exports. Currently <1% of total revenue; medium-term target of ~10% through customer expansion and export focus.
Battery (Avinya Batteries): Revenue up 4x YoY (low base), FY26 revenue 1.28x YoY. Challenging environment from raw material costs, pricing pressure, and shorter delivery timelines; management focused on minimizing losses. Merger with parent company expected by Q4 FY27.
Company-Specific & Strategic Commentary
Hutchinson Technology Partnership: Global leader in automotive sealing systems; PPAP to offer advanced body sealing (glass run channel) solutions across India. New products being co-developed; customer engagement underway with breakthrough expected by end FY27. Main competitors: SFC, Anand Nishikawa, Toyota Bussei.
Organizational Restructuring: Tooling business hive-off to Meraki Precision Tools Engineering Ltd (Q3 FY27); Avinya Batteries merger into parent (Q4 FY27); unified Ajay Group identity across all subsidiaries.
JV Divestment & Capital Deployment: ~₹100 crores received from PPAP Tokai exit; ₹8 crores paid as taxes. Balance: 25% retained for working capital, rest for strategic CapEx - EPDM capacity (one new line operational in Q2, two more this year), tooling tool room expansion, and land near Shambhaji Nagar.
EV Program Participation: ₹64 crores of ₹131 crore lifetime orders from EV programs; products are engine-agnostic (sealing systems) with slightly higher appearance requirements in EVs, yielding minor product premium.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Sustained momentum through FY27 | Q2 to date shows continued strong growth; management expects sales to keep increasing |
| EBITDA Margin | 12-13% sustainable | Long-term target for OEM-focused auto ancillary; improvement from Q2-Q3 as raw material claims settle and utilization improves |
| Raw Material Pass-Through | ~2% pending settlement | Expected to be recovered by end Q2/start Q3 FY27 |
| Aftermarket Revenue Share | ~10% of total revenue | Up from ~6%; driven by SKU expansion and distributor network growth |
| Industrial Products Revenue Share | ~10% of total revenue (medium term) | Currently <1%; focus on business development and export traction |
| Net Debt | Debt-free at net level in 3 years | Short-to-medium term target |
| Tooling Output | +20% YoY volume growth | FY27 target vs 148 moulds developed in FY26 |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Inflation | ~4% raw material cost increase, only ~2% passed on to customers; balance under negotiation with expected settlement by end Q2/start Q3; if not fully recovered, margin pressure persists |
| Battery Business Losses | Continued operating losses from raw material costs, pricing pressure, and short customer delivery timelines; revenue growing but contribution negative; improvement expected from Q2 but remains a cause of concern |
| Geopolitical & Supply Chain Volatility | Management flagged geopolitical developments, commodity price volatility, and global supply chain dynamics as watch items that could influence the operating environment through FY27 |
| Competitive Pricing Pressure | OEM customers require aggressive cost competitiveness; management noted pre-COVID margin levels unlikely to be achieved again as competitive dynamics have changed |
Q&A Highlights
Hutchinson Technology Partnership
- Question: What revenue can be expected from the Hutchinson partnership over the next 3 years, and what product scope is covered? (Hardik Chheda, Lark)
- Answer: Partnership focuses primarily on glass run channel body sealing; new products are being co-developed, not just marketing existing products; customer engagement underway; clarity expected by end of FY27. Main competitors include SFC, Anand Nishikawa, Toyota Bussei. (Abhishek Jain)
Margins & Raw Material Pass-Through
- Question: What is the plan for operating margins and internal targets? (Hardik Chheda, Lark)
- Answer: Raw material costs up ~4%, with ~2% passed on to customers; balance under discussion with settlement expected by end Q2/start Q3. Sustainable EBITDA margin of 12-13% over the long term. (Sachin Jain)
Mahindra Relationship
- Question: Which Mahindra vehicle programmes will PPAP participate in? (Hardik Chheda, Lark)
- Answer: Tier 1 sealing products SOP starts in Q3; also developing injection molding tooling and sealing systems for Mahindra's sunroof system via their Tier 1 makers. (Abhishek Jain)
JV Divestment Proceeds Utilization
- Question: How are the PPAP Tokai sale proceeds being utilized? (Hardik Chheda, Lark)
- Answer: ~₹100 crores received; ₹8 crores paid as taxes. 25% retained for working capital; balance for strategic CapEx - EPDM capacity expansion, tooling tool room expansion, and land acquisition near Shambhaji Nagar. (Sachin Jain)
Battery Business Breakeven
- Question: Where is the battery division on breakeven and are there positive developments? (Hardik Chheda, Lark)
- Answer: Q1 contribution was not good; focus is on minimizing losses. New customers being onboarded, especially in energy storage; improvement expected from Q2 onwards, but the business remains a cause of concern. (Abhishek Jain)
Aftermarket Growth Trajectory
- Question: What is the growth trajectory for aftermarket and any constraints? (Tanya Desai, BS Securities)
- Answer: Aftermarket grew 30% last year with similar growth expected this year; focus on portfolio expansion and distribution reach including online channels; new warehouse in West India to be established this quarter; business only began 3-4 years back with long runway ahead. (Abhishek Jain)
CapEx Plans for FY27
- Question: Has CapEx been outlined for FY27? (Tanya Desai, BS Securities)
- Answer: CapEx directed at EPDM business (one new line operational in Q2, two more lines planned this year), tooling tool room expansion, and land requirements near Shambhaji Nagar. (Sachin Jain)
Growth Sustainability & EV Content
- Question: Should the 34% growth continue through the year, and how does EV content differ from ICE? (Mihir Shah, MB Capital)
- Answer: Q2 to date shows continued strong growth; sales expected to increase. Products are engine-agnostic - similar sealing systems for ICE and EV; EV has higher appearance requirements giving slight product premium. (Abhishek Jain)
Margin History & Growth Constraints
- Question: Why are margins below pre-COVID levels, and what has limited top-line growth historically? (Saket, Individual Investor)
- Answer: Pre-COVID margin levels unlikely to be repeated given competitive dynamics and pricing; sustainable EBITDA margin at 12-13%. Growth was muted because sealing and injection molded product categories didn't benefit from feature-rich cars (electrical content); no clients were lost. Current strategic actions should drive sustained growth this year and next. (Sachin Jain)
Debt Reduction Plan
- Question: What are the plans for debt levels post JV inflow? (Saket, Individual Investor)
- Answer: Target to be net debt-free in the next 3 years. (Sachin Jain)
Key Takeaway
PPAP Automotive delivered a strong Q1 FY27 with consolidated revenue of ₹156.4 crores (+34.1% YoY) and EBITDA of ₹12.4 crores (+33.3% YoY), supported by record industry PV sales, new program ramp-ups, and 73% capacity utilization. Lifetime order wins of ₹131 crores (+51.8% YoY) included ₹64 crores from EV programs, while aftermarket grew 30% with 345 new SKUs. Key strategic moves include the Hutchinson technology partnership for glass run channel sealing, tooling hive-off to Meraki Precision Tools (Q3 FY27), Avinya Batteries merger (Q4 FY27), and PPAP Tokai divestment providing ₹92 crores net proceeds for CapEx in EPDM lines, tooling expansion, and land acquisition. Raw material inflation (4% increase, ~2% passed on) pressured near-term margins, with balance recovery expected by end Q2/start Q3; management targets sustainable EBITDA margins of 12-13% and net debt-free status within 3 years. Key watch points include battery business losses, raw material pass-through completion, and competitive pricing pressure across OEM relationships.