Popular Vehicles Extends Rs 30 Crore Corporate Guarantee for Subsidiary's Inventory Funding

Popular Vehicles & Services Limited , a prominent player in the automotive retail sector, has announced the extension of a corporate guarantee amounting to Rs 30 crores in favor of Axis Bank Limited. This guarantee is to support the inventory funding requirements of its subsidiary, Prabal Motors Private Limited.

Breakdown of the Corporate Guarantee

The corporate guarantee is structured as follows:

Purpose	Amount (in Crores)
Vehicle Inventory Renewal and Enhancement	25.00
Fresh Spares Inventory Funding	5.00
Total Guarantee	30.00

Impact on Financial Disclosures

This move by Popular Vehicles & Services Limited is significant as it affects the parent company's financial disclosures while simultaneously supporting the working capital needs of its subsidiary. The guarantee is primarily aimed at facilitating Prabal Motors Private Limited's automotive business operations.

Strategic Implications

Subsidiary Support: The guarantee demonstrates Popular Vehicles & Services' commitment to supporting its subsidiary's growth and operational needs.
Working Capital Management: By securing this funding, Prabal Motors can better manage its inventory, potentially leading to improved operational efficiency.
Financial Flexibility: The guarantee provides Prabal Motors with enhanced financial flexibility, allowing it to maintain optimal inventory levels for both vehicles and spare parts.

Regulatory Compliance

Popular Vehicles & Services Limited has made this disclosure in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This transparency ensures that shareholders and the market are informed about significant financial commitments made by the company.

Market Outlook

While the immediate impact on Popular Vehicles & Services Limited is limited to the disclosure in its financial statements, this move could be seen as a positive indicator of the company's confidence in its subsidiary's business prospects and the overall automotive market conditions.

As the automotive sector continues to evolve, such strategic financial support could play a crucial role in maintaining competitiveness and ensuring smooth operations across the group's various business units.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+7.41%	+5.70%	-1.66%	-36.42%	-7.65%	-66.54%

Popular Vehicles & Services Limited, a leading automotive dealership company, has made significant strides in expanding its geographical footprint and diversifying its portfolio. The company recently announced the acquisition of R.K.S Motors' authorized Maruti Suzuki dealership in Telangana for approximately INR 90 crores, marking its entry into the state.

Acquisition Details

The acquisition, effective from October 15, 2025, includes:

19 operational locations
27 authorized touchpoints covering Arena, NEXA, True Value, service, bodyshop, commercial driving schools, and supporting back-end functions
All operational assets of the dealership, excluding land and building
Selective onboarding of 1,039 employees

This strategic move strengthens Popular Vehicles' presence in the southern region, adding to its existing operations in Kerala, Tamil Nadu, Karnataka, and Maharashtra.

Financial Performance

For the second quarter, Popular Vehicles reported:

Metric	Q2 FY2026	QoQ Change	YoY Change
Total Income	1,534.60 crores	+16.6%	+1.1%
EBITDA	49.40 crores	+29.1%	-16.5%
EBITDA Margin	3.20%	-	-
Adjusted EBITDA*	53.00 crores	+38.5%	-10.4%
Adjusted EBITDA Margin*	3.50%	-	-

*Adjusted for cess provision of INR 3.5 crores

The company's performance was impacted by the GST rate revision announcement in August, which led to a postponement of purchases, particularly in the mass segment. However, the luxury segment continued to perform well.

Segment-wise Performance

Passenger Vehicles

New vehicle sales: 8,498 units (+48% QoQ)
Service volume: 186,503 units (-7% QoQ)

Commercial Vehicles

New vehicle sales: 2,797 units (+13% QoQ)
Service volume: 50,469 units (+10% QoQ)

Electric Vehicles

New vehicle sales: 1,717 units (+30% QoQ)
Service volume: 9,940 units (+20% QoQ)

Future Outlook

Popular Vehicles remains optimistic about its growth prospects:

The company expects to achieve an organic growth of about 6% in the passenger car business for FY 2026.
With the new acquisition, an additional 6-7% growth is anticipated, potentially leading to double-digit growth in volumes.
The management aims to reduce the revenue contribution from Kerala to below 50% by FY 2027.
The company is evaluating opportunities to add another luxury dealership brand.
A new e-commerce platform for spare parts and accessories is being developed to diversify revenue streams.

Management Commentary

Naveen Philip, Managing Director and Promoter, stated, "This marks an important milestone in our strategic journey with Maruti Suzuki. We see this as a long-term accretive opportunity that enhances our market presence and positions us for sustainable growth in the southern region."

The company expects to normalize inventory levels through the remainder of Q3 and anticipates stronger performance in the coming quarters, aiming to close FY 2026 on a positive growth trajectory.

Analyst Perspective

Shraddha Joshi comments: "Popular Vehicles' expansion into Telangana through this significant acquisition aligns with the broader trend of consolidation in the Indian automotive retail sector. The company's focus on diversifying its geographical presence and exploring new revenue streams, such as the e-commerce platform for spare parts, demonstrates a forward-thinking approach to navigate the evolving automotive market landscape. However, investors should closely monitor how quickly the company can integrate these new operations and improve overall profitability, especially given the current challenges in the mass-market segment."