Popular Vehicles & Services Ltd Management Discussions

Global Economy — Calendar Year 2025

In Calendar Year 2025 (CY25), the global economy delivered resilient but slowing growth. The IMF (July 2025 World Economic Outlook) projected global GDP growth at 3.0% for CY25, while the World Bank took a more cautious view at 2.3% its slowest pace since 2008 (excluding recessions) citing rising trade barriers and geopolitical tensions in West Asia and from U.S. tariff policies.

The global light vehicle market fully recovered from pandemic-era disruptions. S&P Global Mobility estimated 91.7 million units sold in CY25 the first year to exceed pre-pandemic 2019 levels (89.9 million units).

Key global developments in CY25

• U.S. tariffs on imported vehicles (25%) created supply and pricing disruptions. U.S. sales were estimated at ~16.4 million in CY25, with 2026 expected to moderate to ~15.9 million due to consumer caution.

• Global EV sales reached ~20.7 million units (+20% YoY). EV share of new car sales exceeded 25% for the first time globally. China led with 16.49 million NEV sales (47.9% of domestic market). BYD overtook Tesla as global BEV volume leader.

• ~60% of CY25 global EV growth came from markets outside China, Europe, and the U.S., reflecting broadening global adoption.

• West Asia geopolitical conflict created supply disruptions affecting CV and parts logistics across multiple markets, including India.

Indian Economy — FY26 (April 2025 to March 2026)

India maintained its position as the worlds fastest- growing major economy in FY26. Real GDP grew at approximately 7.4-7.6% the CSO Second Advance Estimate (February 2026) placed growth at 7.6%, while RBIs final forecast stood at 7.4%. CRISIL estimated FY26 GDP growth at 7.0%.

The year was characterised by a rare goldilocks environment strong growth paired with exceptionally low inflation. CPI inflation for FY26 averaged just ~2.0- 2.6% far below the RBIs 4% target driven by a steep fall in food prices and the direct impact of GST 2.0 reforms (September 2025), which lowered consumer prices across ~11.4% of the CPI basket. CPI even touched 0.25% in October 2025 a historic low.

Key macroeconomic enablers for FY26

Policy / Enabler	Details	Impact on Auto Sector
GST 2.0 Reforms (Sep 22, 2025)	Rate rationalisation — reduced effective tax on 2W, small cars, 3W and select CVs	Decisive demand inflection from H2 FY26; October 2025 saw all-time monthly retail record
Multiple RBI Repo Rate Cuts	Repo rate reduced to 5.25% — lowest in years	Improved vehicle financing affordability; higher disbursements in mass 2W and small car
Union Budget FY26 Tax Relief	Revised income tax slabs; improved middle-class disposable income	Boosted consumption-led auto demand, particularly PVs
Agriculture & Rural Incomes	Strong kharif crop, above-normal monsoon, healthy rabi sowing	Strong rural demand — 2W and entry- level PV segments benefited most
Benign Inflation	CPI at historic lows; purchasing power improved materially	Consumer confidence improved; financing conditions remained supportive
Strong FDI & Forex Reserves	Gross FDI: US$ 37.7 bn (Apr-Jul 2025); Forex reserves: US$ 687 bn (Jan 2026)	Macro stability; supported capital availability for auto investments

Indian Auto Industry — FY26

FY26 was a landmark year for Indias automobile industry. Total domestic vehicle retail touched a historic high of 2,96,71,064 units (+13.3% YoY) approaching the 3-crore milestone. According to SIAM, domestic wholesales reached 2,82,65,519 units (+10.4% YoY). Every major vehicle category posted its highest-ever annual sales in a financial year for the first time in seven years.

The year was a two-phase year: April through August saw muted growth (2-5% monthly) as consumers awaited GST clarity. From September 2025, GST 2.0 triggered a decisive inflection October 2025 delivered an all-time record monthly retail of over 40 lakh units.

FY26 FADA All India Vehicle Retail Data

Category	FY26 Retail (Units)	FY25 Retail (Units)	YoY Growth (%)
Two-Wheelers (2W)	2,14,20,386	1,88,89,595	+13.40%
Passenger Vehicles (PV)	47,05,056	41,63,927	+13.00%
Commercial Vehicles (CV)	10,60,906	9,49,406	+11.74%
Three-Wheelers (3W)	13,63,412	12,20,834	+11.68%
Tractors	10,50,077	8,82,825	+18.95%
Construction Equipment	71,227	80,668	-11.70%
Total All Vehicles	2,96,71,064	2,61,87,255	+13.30%

Source: FADA Research, April 2026. Numbers exclude Telangana (TS) data collated from 1,463 of 1,466 RTOs.

March 2026 — Best-ever March on Record

March 2026 FADA retail reached 26,92,449 units (+25.28% YoY) the best-ever March in FADAs records. Rural retail grew +26.49% versus Urban +23.82%, underscoring broad-based demand. Two-wheelers led at 19,51,006 units (+28.68% YoY); PV retail set a record at 4,40,144 units (+21.48% YoY) with PV inventory normalised to ~28 days from over 50 days a year earlier.

FY26 Key Sector Trends

• EV adoption deepened across all categories. Total EV retail reached 24.52 lakh units (+24.63% YoY). 3W EV share reached 60.95%; 2W EV share 6.54%; PV EV share 4.25%; PV CNG share 21.98%.

• Rural demand was strong rural retail grew 13.05% vs urban 13.62%. In PVs, rural outpaced urban meaningfully (17.12% vs 10.43%).

• PV inventory corrected sharply from ~52 days (March 2025) to ~28 days (March 2026) — among the healthiest readings in recent years.

• Indias vehicle exports grew ~24% to 6.65 million units in FY26, reinforcing Indias position as a global auto export hub.

• Maruti Suzuki retained PV market leadership with 39.71% share. Tata Motors and Mahindra competed closely at ~13% each. Ather Energy grew 2W market share to 1.12% in FY26 from 0.69% in FY25.

Company Overview

Popular Vehicles and Services Limited (PVSL), part of the Kuttukaran Group, is one of Indias leading fully integrated automobile dealership companies. Incorporated in 1983 and headquartered in Kochi, Kerala, PVSL has been listed on both NSE (PVSL) and BSE (544144) since March 2024.

PVSL operates across the full automotive value chain: new vehicle sales (PV, Luxury PV, CV, EV), pre-owned vehicles, authorised services and repairs, spare parts distribution, and third-party financial and insurance products. The company serves customers across Kerala, Tamil Nadu, Karnataka, Maharashtra, Telangana, Andhra Pradesh, and Punjab.

OEM and Business Partner Network — FY26

OEM / Partner	Segment	Geography	FY26 Status
Maruti Suzuki India (MSIL)	PV — Mass Market	Kerala, Tamil Nadu, Karnataka, Telangana	Core / Largest MSIL dealer in India; added Telangana (27 touchpoints)
Jaguar Land Rover (JLR)	Luxury PV	Select metros in Karnataka	Active;
Audi India (via Imperion Cars)	Luxury PV	Hyderabad, Visakhapatnam, Vijayawada	Added in Q4 FY26; new luxury footprint in Telangana & AP
Tata Motors (via PMMIL)	Commercial Vehicles	Multi-state	Won 4 Tata South Zonal awards in FY26
Daimler India (BharatBenz)	Commercial Vehicles	Tamil Nadu, Maharashtra, & Punjab (new in FY26)	Infrastructure-driven freight; geographic diversification milestone
Ather Energy	EV Two-Wheeler	Karnataka, Kerala, Maharashtra, Tamil Nadu	4 new touchpoints; 160% EV 2W volume growth in Q4 FY26
Balkrishna Industries (BKT)	Tyre Distribution	Kerala & Karnataka	New — 2W & PCR tyre segments; FY26 addition
Honda Cars India	PV	Kerala	Exited — volumes counted only until August 2025
Piaggio	EV - Three- Wheeler	Kerala	Exited — volumes counted only until August 2025

FY26 Operating and Business Performance

FY26 was a year of strong volume and revenue recovery for PVSL, after a challenging FY25. The company delivered broad-based growth across all segments, driven by industry tailwinds from GST 2.0, geographic expansion, new OEM additions, and improved consumer sentiment. Honda and Piaggio volumes and revenue are included only until August 2025. Audi volumes and revenue are included from Q4 FY26 onwards.

5.1 Revenue and Volume Growth Summary — FY26

Business Segment	FY25 Revenue (? Cr)	FY26 YoY Growth	FY26 Revenue (? Cr)	Analysis
Total Revenue from Operations	5,541.2	+15.2%	6,381.1	Full year — broad-based recovery across all segments
PV (Excluding Luxury)	2,830.6	+4.2%	2,948.2	Supply constraints from key OEM (MSIL) in Kerala in Q4 FY26 moderated growth
Luxury PV (JLR + Audi)	470.5	+15.6%	543.9	JLR volumes steady; Audi added from Q4 FY26 provided incremental uplift
Commercial Vehicles (CV)	1,882.9	+31.6%	2,477.4	Strongest growth segment — Tata Motors performance + BharatBenzs Punjab expansion
EV + Spare Parts Distribution	357.2	+15.2%	411.6	Ather network growth + stable high- margin aftermarket volumes
New Vehicle Volume (Units)	44,087 units	+21.2%	53,452 units	All-time high volumes for PVSL, driven by market momentum and GST 2.0

Q4 FY26 — Strongest Quarter

Q4 FY26 saw exceptional acceleration, with total revenue growing +28% YoY and new vehicle volumes growing +43% YoY. Entry-level PV volumes were up >20% YoY, premium PV up ~10% YoY, and CV volumes up >59% YoY (Q4 FY26 basis).

Metric	Q4 FY26 YoY Growth	FY26 Full Year YoY Growth
Total Revenue from Operations	+28%	+15%
PV (Excluding Luxury)	+13%	+4%
Luxury PV	+18%	+16%
Commercial Vehicles	+49%	+32%
EV + Spare Parts	+34 %	+15%
New Vehicle Volume (Units)	+43%	+21%

Financial Performance

Historical Financial Snapshot (Consolidated)

Metric (? Crore)	FY23	FY24	FY25	FY26
Total Income	4,893	5,647	5,562	6,401.1
Gross Profit	750	888	801	861
Gross Profit Margin (%)	15.3%	15.7%	14.4%	13.5%
EBITDA (Reported)	235	286	175	203
EBITDA Margin (%)	4.8%	5.1%	3.2%	3.2%
EBIT	155	194	77	76
Interest Cost	71	98	86	103
Depreciation	79	92	99	127
Profit Before Tax (PBT)	85	98	(9)	(13.3)
Net Profit / (Loss)	64	76	(10.5)	(12.5)
EPS (?)	10.22	12.05	(1.47)	(1.75)
Operating Cash Flow (OCF)	109	80	151	100
Capex (? Crore)	85	81	54	102

Key Financial Ratios and Health Indicators

Indicator	FY23	FY24	FY25	FY26
Total Income (? Crore)	4,893	5,647	5,562	6,401
EBITDA (? Crore)	235	286	175	203
EBITDA Margin (%)	4.8%	5.1%	3.2%	3.2%
Net Profit / (Loss) (? Crore)	64	76	(10.5)	(12.5)
PAT Margin (%)	1.3%	1.3%	-	-
Interest Cost (? Crore)	71	98	86	103
Net Debt (? Crore)	477	367	392	623
Net Debt / EBITDA (x)	2.0x	1.3x	2.2x	3.1x
Return on Capital Employed (RoCE)	18.3%	17.7%	7.2%	5.7%
Return on Equity (RoE)	18.7%	11.6%	-	-
EPS (?)	10.22	12.05	(1.47)	(1.75)
Inventory Days	38 days	45 days	45 days	41 days
Market Cap (? Crore)		900	734	738

Segment-wise Business Review

New Vehicle Sales

FY26 was a strong recovery year for our core new vehicle business. Total new vehicle volume grew +21% YoY. Growth was driven by GST 2.0 tailwinds, entry-level car demand, addition of Audi from Q4 FY26, expansion through organic & inorganic growth and improved consumer sentiment across geographies.

Metric	FY24	FY25	FY26 (YoY Growth / Est.)
Volume (units)	46,665	44,087	53,452 (+21.2%)
Average Selling Price (?)	8,89,791	9,16,376	9,00,483
Total New Vehicle Revenue (? Cr)	4,152	4,040	4,813

Pre-Owned Vehicle Sales

Metric	FY24	FY25	FY26
Volume (units)	10,698	10,636	11,000
Average Selling Price (?)	3,34,618	3,40,015	3,26,178
Revenue (? Crore)	358	362	359

Services and Repairs

The service segment witnessed a mid-single-digit decline in revenue in FY26 on a YoY basis. However, higher Average Selling Prices (ASPs) partially offset the volume impact. The service vertical remains a key margin-support business, contributing disproportionately to EBITDA. The decline in volumes was partly due to the rationalisation of low-value job cards, while ASP improvement reflects our focus on higher-margin services such as collision repair and richer service packages. CV services delivered strong growth, supported by higher servicing intensity, workshop upgrades and better utilization of the expanded network. As the EV segment expands, service volumes are beginning to reflect stronger recurring aftersales potential.

Metric	FY24	FY25	FY26
Volume (service jobs)	10,53,545	10,42,298	9,82,100, (Mid-single digit decline YoY)
ASP (? per service job)	8,213	8,666	9,855 — higher ASPs partially offset volume decline
Revenue (? Crore)	865	903	968

Spare Parts and EV Distribution

Spare parts distribution is a high-margin, recurring income vertical, contributing ~4% of turnover and ~3% of EBITDA. In FY26, the combined EV + Spare Parts cluster grew +15% YoY, supported by four new Ather touchpoints and steady aftermarket throughput. We are also servicing approximately 3,100 Ather vehicles per month.

Metric	FY25	FY26
Spares Revenue (? Crore)	273	267.0
% of Total Revenue	4.9%	4.2%
% of EBITDA contribution	8%	3%
Ather vehicles serviced / month (FY26)		3,100
EV 2W Volume Growth (FY26)		+102%
EV Service Volume Growth (FY26 YoY)		+79%

Our Strategy — FY26 Actions and Progress

FY26 marked significant progress on our multi-year strategic agenda. We moved from a period of regional concentration and single-segment dependence toward a broader, more resilient pan-India dealership platform. Below is a review of our ten strategic themes and the evidence of progress in FY26.

Strategic Theme	FY26 Key Actions	Evidence of Progress / Outcome
Geographic Diversification	Entry into Telangana (Maruti — 26 touchpoints), Punjab (BharatBenz — 10 touchpoints), AP (Audi — 5 touchpoints)	Telangana commenced October 2025; Punjab revenue-accretive at takeover; Kerala share structurally declining
Luxury Portfolio Strengthening	Added Audi (Telangana & AP via Imperion Cars); continued JLR operations	JLR disruption resolved post cyber incident; Audi to contribute meaningfully in FY27; Luxury PV revenue +15% FY26
Commercial Vehicle Expansion	BharatBenz in Punjab; integrated 3S model; North India freight push	CV volumes +30 % YoY in FY26; CV revenue +32% FY26 full year; 4 Tata South Zonal awards
EV Ecosystem Development	4 Ather 3S facilities (Maharashtra 3 + Kerala 1); 2 Ather in Bengaluru (Experience + Service + Warehouse model)	EV 2W volumes +102 % YoY ; EV service +79% YoY; 3,100 Ather vehicles serviced/ month
Service Business Reinforcement	Higher-margin services focus (collision & repair); reduced low-ticket campaigns; geographic service expansion	ASP improved meaningfully YoY; service topline resilient despite volume softness
Aftermarket & Distribution	BKT tyre distributorship (2W & PCR, Kerala & Karnataka); ZPAREX e-commerce platform developed (Q1 FY27 launch)	New distribution vertical entered; digital spare parts platform developed
Portfolio Rationalisation	Divested Vision Motors (Honda) and Kuttukaran Green (Piaggio) for ? 70 Cr; closed JCB spare parts distribution	Corporate structure simplified; capital redeployed to core towards acquisitions & higher-growth and higher-potential areas; management bandwidth freed
Operational Excellence	Back-office centralisation; centralised service marketing; inventory rationalisation	New vehicle inventory 29 days; improved collections
Balance Sheet Discipline	Disciplined working capital; reduced inventory; controlled borrowings despite acquisitions	Balance sheet described as robust; inventory materially reduced; borrowings stable
OEM Relationship Deepening	Expanded MSIL, BharatBenz; new Audi relationship; deepened Ather; integrated 3S model	Multiple OEM awards; credit rating reaffirmed; PVSL remains largest MSIL dealer in India

Highlights of FY26 — Our Year in Summary

FY26 was the year we turned the corner. After a difficult FY25, we entered FY26 with a clear agenda: diversify geographically, strengthen our multi-brand portfolio, and deliver volume recovery. We delivered on all three fronts.

• We entered three new states: Telangana, Andhra Pradesh, Punjab — adding new OEM relationships.

• New vehicle volume grew +21% to ~53,452 units.

• The CV segment delivered its best-ever performance (+32% revenue), supported by BharatBenz Punjab and Tata Motors growth.

• EV business scaled rapidly — Ather volumes up 102% in FY26, EV service volumes up 79%, and we opened 6 new Ather touchpoints across India.

• Our Tata Motors subsidiary (PMMIL) won 4 awards at the South Zonal Meeting — Channel Partner Score, Best Customer Support, Customer Success Centre, and SMILE Driver (Sales).

• Inventory days reduced from ~45 to ~41 days — signalling healthier sell-through and improved working capital efficiency.

• We unlocked ? 70 crore of capital from non-core divestments (Honda and Piaggio), which is got redeployed into higher-return opportunities.

Risks and Concerns

Risk	Category	Impact on PVSL	Probability	Mitigation
Elevated debt from expansion & acquisitions	Financial	Higher interest burden; elevated Debt/EBITDA	Medium	Geographic revenue diversification; non-core divestitures
IndAS acquisition adjustments	Accounting	Impacted reported profitability in FY26; one-time in nature	Low (FY27 onwards)	Expected to normalise in FY27 as integration completes
MSIL supply constraints in Kerala	Operational	PV (excl. luxury) volume pressure in Q4 FY26	Medium	Multi-OEM portfolio reduces single- OEM risk significantly
Service segment volume decline	Business	Mid-single digit decline in FY26 service volumes	Medium	Higher ASPs partially offset; Honda/ Piaggio exit is one-time base effect
West Asia geopolitical conflict	Macro	CV supply disruptions; fuel price volatility; 53.2% dealers report disruption	High (near- term)	Diversified supplier base; monitoring freight rate impact
Kerala geographic concentration	Geographic	Exposure to region- specific macro and political risks	Medium	Active diversification into KA, MH, TN, TS, AP, PB
OEM alliancing risk	Strategic	Risk of missing OEM targets; high MSIL dependence	Medium	Regular contract reviews; proactive OEM engagement; Audi, Ather additions
EV disruption	Industry	Shift in customer preferences; new entrant competition	High (long- term)	Positioned with Ather; e-Vitara readiness underway; EV service capability built
Cybersecurity	Technology	Data theft; business disruption (as seen at JLR OEM)	Medium	Advanced cybersecurity systems; regular audits; incident response mechanisms

Internal Control Systems

We have in place adequate internal control systems commensurate with the nature of our business, size, and scale of operations. These controls are designed to ensure orderly and efficient conduct of operations, safeguard of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The internal control systems are reviewed periodically by management and tested by internal auditors to assess their effectiveness. The Audit Committee of the Board regularly monitors the adequacy of internal controls, reviews audit findings, and ensures that corrective actions are implemented promptly. We continue to invest in centralisation of back-office operations across showrooms and centralised service marketing to improve consistency and reduce operational risks.

Industry Outlook — FY27

74.72% of dealers expect FY27 growth in the 3-7% consensus range, underscoring that current uncertainty is viewed as transitional rather than structural. RBIs FY27 GDP forecast is 6.6% — domestic demand, PLI incentives, and GST benefits are expected to sustain momentum. Source: FADAs Online Members Survey

Outlook Parameter	Data / Finding
April 2026 Growth Expectation (Dealers)	50.56% expect growth 40.15% flat 9.29% decline
Apr-Jun 2026 (Q1 FY27) Growth Expectation	49.81% of dealers expect growth
FY27 Full-Year Outlook	74.72% expect growth — 3-7% consensus range
Dealer Liquidity (April 2026)	Good: 51.30% Neutral: 40.15%o Bad: 8.55%o
Dealer Sentiment (April 2026)	Neutral: 54.65% Good: 36.06% Bad: 9.29%
Financing Conditions	72.5% report no change — stable, no broad-based tightening
West Asia Supply Disruption	53.2% dealers report some form of supply / dispatch disruption
Key FY27 Headwinds (Dealer Survey)	Economic slowdown (40.5%), OEM supply risk (30.5%), Fuel prices (14.9%)
India GDP Growth Forecast FY27 (RBI)	6.6% — domestic demand, PLI, and GST benefits to sustain momentum
EV / CNG Interest Acceleration	56.9% of dealers report accelerating customer interest in EV and CNG options

Our Strategic Roadmap — FY27 Priorities

Strategic Pillar	FY26 Actions	FY27 Priorities
Luxury Segment	Added Audi from Q4 FY26 in Telangana & AP via Imperion Cars; JLR steady	Scale Audi volumes; explore further luxury brand additions; target high-ASP premiumisation
EV Ecosystem	Ather 2W: 6 new touchpoints; EV technical training; e-Vitara readiness	Deepen Ather network; evaluate 4W EV OEM partnerships;
Geographic Diversification	Entered new states of Telangana, AP, Punjab in FY26	Reduce Kerala revenue to below 50%; target double-digit growth from new geographies
CV Segment	BharatBenz in Punjab; 4 Tata South Zonal awards; CV revenue +32%	Leverage India infrastructure push; grow MCV/ HCV fleet business; expand BharatBenz network
Aftermarket & Distribution	BKT tyre distributorship; EV+Spares cluster grew +15%	Grow BKT coverage in KL, KA; improve service ASP; scale ZPAREX digital parts platform
Balance Sheet Health	Non-core divestitures (? 70 Cr); new vehicle inventory days to 29	Further deleverage; reduce Debt/EBITDA; improve interest coverage; target 5% EBITDA margin in FY27
Service Business	ASP improved meaningfully; collision & repair focus	Target double-digit service volume growth from FY27; expand geographic service footprint
Margin Normalisation	Scale benefits beginning from Q3 FY26	EBITDA margin expected to normalise toward 5% as scale builds and integration costs reduce

Disclaimer

This Management Discussion & Analysis has been prepared based on publicly available information: PVSL FY26 Business Update filed with BSE/NSE (17 April 2026); PVSL Annual Report FY2024-25; FADA FY26 and March 2026 Vehicle Retail Data (6 April 2026); SIAM FY26 Annual Wholesale Sales Data (April 2026); RBI Monetary Policy Reports and CSO GDP Estimates (FY26); IMF World Economic Outlook July 2025; World Bank Global Economic Prospects June 2025; S&P Global Mobility CY25 Light Vehicle Forecasts; IEA Global EV Outlook 2025; Screener.in consolidated financial data; PVSL internal strategic review documents. FY26 full-year audited financial statements have not been published; revenue estimates are indicative and all profitability metrics are marked XX where data is unavailable. This document is for informational and internal reference purposes only and does not constitute investment advice.