PPAP Automotive Limited has executed a settlement agreement on January 7, 2026, for the sale of its entire 50% stake in joint venture company PPAP Tokai India Rubber Private Limited (PTI) to Japanese partner Tokai Kogyo Co. Ltd. The company has informed stock exchanges about this strategic divestment under regulatory compliance requirements.

Settlement Agreement Details

The settlement agreement was executed between PPAP Automotive Limited, Tokai Kogyo Co. Ltd, and PTI, marking a significant milestone in the divestment process. The transaction details are structured as follows:

Financial Impact and Company Details

The joint venture PTI contributed significantly to PPAP Automotive's portfolio, with a net worth of ₹35.96 crores, representing 12.49% of the parent company's net worth. However, PTI reported nil turnover contribution during the last financial year. The buyer, Tokai Kogyo Co. Ltd, is incorporated under Japanese laws and located at 4-1 Nagane-cho Obu City Aichi Pref. Japan 474-8688.

Regulatory Compliance and Transaction Structure

PPAP Automotive has confirmed that this transaction does not fall under related party transactions and is not connected to any promoter group entities. The company has provided detailed disclosures under Regulation 30 of SEBI Listing Regulations and SEBI circular dated July 13, 2023. Key compliance aspects include:

Strategic Implications

Upon execution of the settlement agreement, PTI will cease to be a joint venture company between PPAP and Tokai Kogyo. This transaction represents a complete exit from the joint venture structure, providing PPAP Automotive with ₹100.00 crores in consideration while allowing the company to restructure its business operations. The deal is expected to be completed by February 28, 2026, subject to standard regulatory and due diligence processes.

PPAP Automotive Ltd (ISIN: INE095I01015) reported a 5.2% year-on-year decline in consolidated revenue to INR 253.60 crores for the first half, reflecting subdued automotive demand and delayed battery business approvals. Despite the challenges, the company remains optimistic about a recovery in the second half, buoyed by new model launches and diversification efforts.

Financial Performance

The company's financial results for H1 showed:

The decline in EBITDA was primarily attributed to lower asset utilization and under-absorption of fixed costs due to reduced production volumes. The battery business contributed a loss of INR 2.10 crores, impacting the overall profitability.

Order Book and New Launches

Despite the challenging environment, PPAP Automotive secured new lifetime orders worth INR 707.00 crores in H1, including INR 16.00 crores from EV programs. The company's total lifetime order book now stands at INR 4,171.00 crores, providing long-term revenue visibility.

PPAP has commenced supplies for new vehicle launches, including:

• Tata Altroz
• Maruti Victoris
• Vinfast VF6

Segment Performance

Aftermarket Business

The Elpis brand continued its growth momentum, expanding 37% year-on-year in Q2, with 133 active distribution partners and 1,269 products.

Commercial Tool Room

Operating under the Meraki brand, this division received orders for 106 molds in H1, with a current order book of 138 molds worth INR 30.00 crores.

Industrial Products

This division is expected to see multifold growth compared to the previous year, driven by strong traction in domestic and export markets.

Battery Division

Under Avinya Batteries, the division faced delays in customer approvals, impacting Q2 sales. However, the company anticipates improved performance in H2.

Outlook and Guidance

PPAP Automotive expects a more positive outlook for H2, supported by:

• Festive demand
• Improving rural sentiment
• Impact of GST 2.0 and monetary easing measures
• New project start-ups (Tata Sierra, Renault Duster, Maruti Suzuki e Vitara)

For the full year, the company has provided the following guidance:

• Consolidated Revenue: INR 575.00-600.00 crores
• EBITDA: INR 60.00-65.00 crores
• PAT: INR 10.00-12.00 crores

Management Commentary

Abhishek Jain, Managing Director and CEO, commented, "The year has begun with a strong strategic win and a healthy order book even as quarter 2 reflected near short-term revenue moderation amid a subdued industry environment. We expect that the coming quarters will gain momentum, supported by new program launches, enhanced execution and a gradual recovery in automotive sector demand."

As PPAP Automotive navigates through the current challenges, its diversification strategy and new order wins position the company for potential growth in the latter half. Investors will be closely watching the execution of new projects and the recovery in the automotive sector to gauge the company's performance in the coming quarters.