Popular Vehicles And Services Ltd (NSE: PVSL) Q4 2025 Earnings Call dated May. 30, 2025
Corporate Participants:
Naveen Philip — Managing Director
John Verghese — Chief Financial Officer
Unidentified Speaker
Analysts:
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Popular Vehicles and Services Limited’s Q4FY25 earnings conference call. Before we begin, a brief disclaimer. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this call is being recorded.I now hand the conference over to Mr. Naveen Philip, promoter and Managing Director of Popular Vehicles and Services Limited. Thank you. And over to you sir.
Naveen Philip — Managing Director
Thank you. Good morning everyone and a very warm welcome to our Q4 and FY25 earnings call. Joining me today on the call are Raj Narayan, our CEO of Poplar Vehicles and Services. John Varghese, the group CFO Epam Maman, the CFO designate and other senior team members.
Before I speak about the past year performance I would like to revisit a point we discussed during our last call. Our intention to consider divestment of two subsidiaries. These included our wholly owned subsidiary Kutukaran Green Private Limited which is a Piaggio business and our wholly owned step down subsidiary Vision model. I’m pleased to share that the Board of Directors has approved the divestment of both these entities for a total consideration of 70 crores. We anticipate the transaction will be completed by July. This decision is part of a broader strategic effort to optimize resource allocation. The proceeds from the divestment, along with other resources previously committed to these subsidiaries will be redirected to accelerate growth of our core business. This move reinforces our commitment to focusing on key growth drivers and creating long term value. The proceeds of the divestment will primarily be utilized to expand the network with a particular focus on markets outside Kerala. We had earlier given guidance in 2024 in terms of bringing down our Kerala contribution to sub 50% and that’s the overall focus area. Despite the overall market remaining subdued during the year, we remain committed to our expansion strategy both by strengthening our presence in existing markets and by entering new geographies with our current OEM partners. To elaborate with Ather, we have entered a new state, Maharashtra, marking a significant step forward in our EV strategy. Each upcoming facility will include an experience center, a service center and a warehouse. Two outlets will be set up in Nagpur with one each in Chandrapur and Chandrapati Sambaji Nagar, commonly Ahuholabad. Operations at these locations are expected to come in Q2. As for FY26 with Maruti, we expanded into Karnataka by launching a state of the art 3S facility comprising a showroom, service center and spare part division in Ablahalli, Bangalore. The facility features 5,000 square feet of showroom space and a 10,000 square feet service area achieved with approximately 20 days. The total investment for this facility was approximately 9 crores. Additionally, we have received letters of intent to establish Nexa Studio outlets in Kerala, further strengthening our presence in our home state. With jlr. Our Maharashtra expansion is on target and we’ll be launching our state of the art 3S facility in Hingna, Nagpur. This should also be operational by H2 of this year. Coming to the business overview FY25 was a challenging year for the Indian automotive industry. Retail demand across categories remained subdued with the entry level and small car segments being particularly affected. Several external headwinds significantly impacted consumer sentiment. While the festival period did not materialize as anticipated, dealers across the industry face elevated inventory levels too. Our performance too was impacted by these challenges and FY25 fell short of our expectations, especially on the volume front in our new vehicle business performance. During FY25 was impacted by a combination of macroeconomic headwinds and subdued retail demand. High inflation and a weaker than expected festive season led to buildup of inventory in Q2 Q3 which in turn put pressure on our working capital and also meant higher discounts. This resulted in higher short term borrowing and increased interest costs while our long-term debt remains negligible. The financial impact was largely driven by our short term working capital requirements, an area we are actively working to bring under tighter control. In response to high rising inventory levels, we took timely and decisive measures. We deliberately curtailed further inventory offtake from OEMs and implemented a series of regulative retail initiatives. These included targeted sales campaign, sharp up marketing interventions and strategic discovery compared to the previous years to facilitate the clearance of older model year stock. As a result of these focused efforts, we successively brought down our inventory levels back to March 24th level by the close of FY25 and we continue to focus on that in quarter one of this year. We remain fully aware of prolonged market slowdown and are closely working with our OEMS partners to better align inventory levels moving forward. While these proactive steps have generally impacted our margins, we are confident that our inventory alignment strategy will enable us to recover profitably at a much faster pace in the coming quarters. In our pre owned vehicle segment, the overall market slowdown had a noticeable impact. Being a price highly price sensitive, the mass pre owned category was particularly affected with inflation driven increases in cost of ownership, further dampening consumer demand. As a result, volume growth remains subdued across several markets. Our service business as we had guided earlier was also faced headwinds during the first half of the year due to multiple factors. We witnessed a marginal recovery in the second half and volume growth in terms of overall FY25 was largely flat. Our focus remains on building a leaner and digitally enabled organization. We believe that this transformation will support a long-term goal of delivering a superior customer experience and while also improving upon our profitability. While we took a lot of steps internally, we also got a third party perspective by hiring Accenture to conduct a deep dive into our ongoing transformation journey. One of the key focus areas was sales manpower productivity, targeting an increase of additional car per salesperson per month. This initiative is expected to result in an incremental volume of this year of about 3,000 cars and going forward at a much larger number per se and also an increase anticipated increase in the finance income per car translating to an annual gain of approximately 4 to 5 crores on the service trend. Average revenue per car is rising by around rupees 300, which is expected to add approximately rupees. Rupees 4 closed this year. We also taken a one time manpower correction measure which is expected to deliver an annualized benefit of around 7 crores in FY26. The lessons from FY25 have made us more resilient and better prepared to navigate market uncertainty. As we step into a new year, we do so with a sharper strategic focus, stronger operational control and renewed energy. To conclude, FY25 was undoubtedly the most difficult year. It is also one for strategic introspection and realignment. A year of deep learning and strategic research. Looking ahead to FY26 we believe the worst is behind us. The steps we have taken over the year we have laid a strong foundation for sustainable growth. We are confident that with a strategic focus on luxury vehicles, electric mobility and services coupled with tighter operational control, we are optimistic about delivering improved performance and creating a value for all our stakeholders. Going forward with this, I would like to hand over the call to our CFO John Varghese to update you on the financial performance for the quarter and the full year gone by. Thank you,
John Verghese — Chief Financial Officer
Thank you. Good morning everyone. I will take you through the company’s operational financial performance for Q4 and FY25. Starting with Q4 and FY25 new vehicle business we sold about 10,370 new vehicles 11,116 in similar quarter previous year showing a degrowth or y on y de growth of 6.7.
Total income from new vehicles was 1019 crores up by 1.8% yoy from 1001 crore. In acute quarter of FY24 the average selling price increased by 9.2% from 9 lakh rupees to 9 lakh 82 thousand rupees. Pre owned business the company sold 2659 pre owned vehicles versus 2434 in similar quarter previous year showing a 9.2% yoy growth. Total income from pre owned vehicles sold was at 86 crores that is up by about 8.2% from Q4 of FY24.
The ESP decreased by about 0.9% from 3,26,000 to 3 23,000. The company services and repair business did volumes of two 62 vehicles versus 257 in Q4 of FY24 showing a 1.9% YUI growth. Total income from retail services and repairs stood at about 207 crores which is down by 8% from 225 crores.
In Q4 of FY24. The ASP decreased by 9.6% from 8,700 to 7,900. The company’s spare part distribution business clocked total income of 63 crores, which is down by about 4.7%. YOY coming to the financial performance, the total income for the quarter stood at about 1300 crores, which shows about about 0.3% growth compared to Q4. The EBITDA was about 31st. Versus 71 crores in Q4 of FY24 which is a decrease of about 58%. The EBITDA margin stands at 2.2% for this quarter there was a loss of about 13 crores. This quarter was a spat of 20 crores in Q4 of last year. Segment through performance the PVA Revenue stood at 785 crores. Was the 745 crores of Q4s of FY24 which is an increase of 5.4%. The CV revenue was shown a decrease of about 6%. It ended up with about nearly less than 500 crores versus 528 crores in Q4 of last year. The EV revenue was increased by about 9% from 25 crores to from about 23 crores of Q4 of last year. Coming to the full year FY25 performance, the new vehicle sales was clocked about 44,087 units versus 46,665 last year which shows a DP growth of 5.5%. The total income from the segment was 4000 crores which is down about 3% from 4000 crores in FY24. However, the ASP increased by about 2.9% from 8.89 lakhs to about 9.15 lakhs of sale of more premium and luxury vehicles pre owned vehicles. We sold about 10,600 similar last year with a slight degrowth of about 0.6%. The total income from the segment of about 361 crores which is a growth of 0.8% from 358 crores of last year. BSP increased by about 1.4% from about 3:34 to 3:39. The service and repair business did volumes over 1042,000 vehicles versus 1053 of last year which is a degrowth of 1.1%. The total income from this business was 895 crores up to 3.3% from 865 crores. The average selling price increased by 4.4% from 8200 to 8500. The company’s PayPal distribution business dropped total income of 264 crores as well as 0.4% from 263 in FY24. As far as the financial performance is concerned, our Total income for FY25 stood at 5561 crores against 5646 in FY24 which translates to 1.5% D group. EBITDA was at 175 crores against 286 crores the previous year, a decrease of 38%. The EBITDA margin stands at 3.2% for FY25. There was a loss of about 10.5 crores in the PAT versus that of 76 crores in FY24. Segmented performance appeared with passenger vehicle revenue stood at 3300 crores versus 3300 crores of FY20. Things was slightly. Decrease of 0.2%. Commercial vehicles there was a decrease of nearly 3 and a half percent from 1954. It came down to 1882 and EV revenue grew by about 2 and a half percent which is from 85 crores. It went up to 87 crores in the balance. If you look at the balance sheet and cash flows, our working capital in terms of number of days was 46 days which includes inventory days which is similar in line of previous years which is 45 days. The interest coverage is 2 times debt to equity ratio is 0.7 and net debt to equity is 0.6 and net debt to EBITDA is 2.2. The cash generated from operating activities is of course 2151 crores versus 80 crores of the previous year. Other Updates Credit rating Crisil Ratings has reaffirmed the rating awarded to the company as a long term rating of Crisil a stable and short term rating at CRISIL A1 on the outstanding loan of around 468 crores. Loan facilities of the company as far as awards and recognition are concerned, Proper Works Private Limited operating under the Markland brand has been honored with the Certificate of Excellence at the prestigious ET Business Awards 2025 for business excellence, cementing his reputation as the most trusted dealer who Jaguar Land Rover in the state of Karnataka. We also received one silver medal and two bronze medals at the national level Annual Service Excellence Championship conducted by Marthi Suzuki and Popular Auto Works. Again, the company’s only owned subsidiary is secured second place in the JLR’s All India Q4 performance rankings. Statewide revenue as of 31st March, Kerala contributed to 62%, Tamil Nadu 23, Karnataka 10 and Maharashtra 5. That’s it for myself. And now I would like to open the floor for Q and A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The fourth question is from the line of PRIT from Incred amc. Please go ahead.
Unidentified Participant
Thank you for the opportunity. I will add a couple of questions from my side. First is as you have mentioned in the previous rate of 15%. Do you think this will be achievable or are there any changes in the estimation? And also it could sell the expectation of growth rate of spare part business and service business.
Unidentified Participant
As your services sales rates are already at 28x do you see more improvement here?
John Verghese
Your voice was a bit muffled but what I understood. The first part of what I understood is that we had given a guidance of 15% growth year on year that on a long term basis continues to be the same. As we said earlier, this year was a flip and there is a good change as part of long term strategy of the organization in terms of growth as well as the growth strategies continues to be the same.
The second part of the question was not very clear to us. If you could repeat it please.
Unidentified Participant
Accepting spare parts and service business as your service business is already. Your service to sales volume is already 2828 x. Do you see more improvement there or is that. It is.
John Verghese
Yeah. Service to sales ratio continues to be at 28 and will remain there. But however, what we’re looking at is to improve the productivity of service and the labor for car that we generate and that that with those initiatives we’ll be improving the profitability. But the ratio per se I think would more or less remain the same plus or minus a few points.
Unidentified Participant
Okay, and one more thing. Demand out demand outlook in April. Are we still giving higher discount? Do we see that from financial year 26 we can be able to maintain the ebit margin of 5% or is there any constraints will bend?
Naveen Philip
So we were able to bring down the discounts by a good margin in April and May. Jan, Feb. March was a little high because we had to sell out the year back models of 2024 also. So that’s more or less taken care. We have closer to about 200 numbers which will go out. But overall the discount per car in April and May is almost half of what it was in the previous full year average.
Unidentified Participant
Okay, and if any update you would like to give on the acquisition, you mentioned that it will be happening quarter one.
Naveen Philip
Which one?
Unidentified Participant
Acquisition. Acquisition.
John Verghese
Yeah, we are online with that. Hopefully we’ll be able to do it by quarter one if not early for Q2.
Unidentified Participant
Okay, and one last question from my side. I can see that in the last quarter the ASP of pre owned vehicle as well as service maker as well as service business has fallen down drastically. Is there any particular reason why why it has happened?
Naveen Philip
The service has not come down. In fact service overall has at a company level has gone up by about 4%. That is in terms of overall value of service. But ASP of service we have 4% for the group we have gone from about 8 to 10. 213 to 8575 but DBSL per se we had DBSL per se. The popular vehicles per se we dropped by about 2% in terms of ASP in terms of services. That’s a mistake in that speech.
Unidentified Participant
Okay and if you to mention on the Capex lines For financial year 26 and 27, what amount of capex are you planning?
John Verghese
Capex Capex we are Planning is about 30 crores for the for the next financial year. This excludes any acquisitions that we have already in discussions with.
Unidentified Participant
Okay, I’ll join back in the case. Thank you for.
Operator
Thank you very much. The next question is from the Ryan of Raghulandan NL from Nirvama Research. Please go ahead.
Unidentified Participant
Good morning sir. Thank you for the opportunity. Firstly on how do you see the volume outlook for JLR in FY26 especially in light of the recent agreement with UK. Also with reference to the new Nagpur outlook, can you talk about the CAPEX and timeline for breakeven?
Naveen Philip
So first is on the fta. I think there’s a little bit of misconception. I think by the time the FDA actually takes into effect as what we have been told and what we’ve understood will take a couple of years more. Having said that, the Range Rover, the Range Rover Sport Discovery, Sport Range Rover, Evoke, all are being manufactured in India, locally manufactured, so not much of a change there.
People were most probably speculating on the Defender but unfortunately right now the Defender is made in Slovakia and not in uk. So any FTA agreement with UK actually does not have any effect on the Defender prices per se. But we’ll have to watch this going forward as to how this whole thing would roll out over the next couple of years per se.
This is what the guidance that we have received. So we’re not looking at any volume change because of the FTA per se. In terms of Nagpur we’re looking at an investment of about 12 and a half crores. We should be probably up and running by August end September early. So we’re looking at October to March in terms of numbers, probably about six to eight numbers in terms of overall numbers of sales from the per month in terms of the Nagpur and the 1110 district and joining Nagpur is what we look at in terms of break event the year after. Got it. Thank you for that. On the.
Unidentified Participant
New outlets of Maruti, how do you see the addition to volumes in FY26 for Maruti, how would you see the same store growth and addition to volume from new outlets in FY26? Thank you.
John Verghese
From new outlets or from existing outlets? From new outlets joining.
Unidentified Participant
So I’m asking both actually same store growth as well as the new outlet contribution.
John Verghese
Same store growth. We are looking at a very muted thing. We are looking at about in terms of volume wise about 4 to 5%
Unidentified Participant
And addition from new outlets.
John Verghese
New outlets. So Bangalore is one outlet that we have. So from the Q2 onwards, since we’ve just started Bangalore in May, from Q2 onwards, we are hoping that we will be looking at about 125 to 140 vehicles on an average which will translate to about 1,600 vehicles for the year.
I mean about 1200 vehicles for the year. So which is the number that we would have from the Karnataka operations?
Unidentified Participant
Got it sir. Thanks so much for this. And on the CV segment, given that there is some slowdown but general expectation is that some improvement is likely in FY26. How do you see that?
John Verghese
So CV in terms of again CB slightly complicated. We have to break it down into segments. So we continue to see a very strong growth in the passenger segment per se in construct segment there’s some green shoots happening across the country so we’re hoping some development in terms of the construct segment.
Cargo continues to hold steady. The small commercial segment has seen a drop per se in terms of numbers so that we are not too sure going forward. Given both in terms of finances for first time users et cetera being still little subdued as CVs we don’t see a growth at all. We probably see negative number on SCVs even this year.
But the other parts of the CV segments we are seeing a group.
Naveen Philip
But having said that, for our company, for our group, as far as business is concerned, we are seeing a growth both in Tamil Nadu and Maharashtra and we have open service centers in Maharashtra. Hence those will bring more traction is what we expect from our Maharashtra operations.
Unidentified Participant
Thank you sir. On margin side, considering the cost saving efforts which you highlighted, plus the additional income from finance income surveys and lower discounts which Raj sir highlighted, how do you see the range for the margin for FY26?
John Verghese
We want to get back to the ebitda margins of 5.1% which we have plotted FY24. That is our aim. Irrespective of the costs of JLR, new setups that is coming up or any other the Karnataka setup for which we have started arena, we nevertheless would like to get Back to the 5.1%.
Unidentified Participant
Got it, sir. And it will be more back ended because by Q2 onwards Karnataka will start operation H2. Even the Nagpur out it will be up and running. So H2 should see a better margin.
Naveen Philip
Absolutely, absolutely. Q1 will still be a tough one. But Q2 onward we seeing a much better.
Unidentified Participant
Got it. And cost savings you indicated roughly about 15 crore. I mean cost savings plus incremental income. Would that be right? Finance income,
John Verghese
We’ve given a guidance of about 7 crores and about 4 crores. A radiation in terms of service income that would be about 11 crores. And finance income about 3 to 4 crores.
Unidentified Participant
Got it sir. Thank you sir, thank you so much. Wishing you all the best.
Operator
Thank you very much. The next question is from the line of Gautam Madhavan from FedEx Securities. Please go ahead.
Unidentified Participant
Thank you. Thank you guys for this. Very helpful. Just a couple of questions from my side, you know, one, if we can just talk through the overall demand environment and then touch upon maybe Nexa and Arena and how did it look for last year and what’s the outlook for this year.
And the second one is just on, you know, guidance around inventory days. And again if you can just touch upon the different brands and within Maruti also if we can get some guidance on Nexa and Arena. Thank you.
John Verghese
Okay, for last year arena was on a regrowth for us closer to about 10% or so. In terms of Nexa it grew handsomely. But overall Nexa contribution also which was around 35% in the previous year came up to about 40%.
Operator
Ladies and gentlemen, the line for the management has been disconnected. Kindly hold till we connect them again. It. Ladies and gentlemen, the management line is reconnected. Thank you for patiently holding.
John Verghese
Okay, so for the last year between arena and Nexa, Nexa had a growth of about 15% for us. And on the arena front it was a degrowth in terms of the demand. In this year, April showed promise in terms of the inquiries going at double digits. May started well in the first three, four days, but in the second half onward the slight decline is there.
I mean, possibly because of the monsoons and all happening here. In terms of these, you also wanted to understand model specific or is it just brands? Which is so that is on the other hand, this year also. This year also the same trend is concerned. Arena has recovered slightly, but not to the extent at which it should be.
NEXTA is still going good.
Unidentified Participant
Sorry, but you got cut off when you were mentioning the contribution of NEXA has increased to what percentage?
John Verghese
So the contribution of NEXA has gone up to 40% as of now, compared to say at 35, 36% in the last year. So in Kerala, NEXA has been growing at a much higher pace than the national average.
Naveen Philip
And the next one was just on inventory also we can just go through, you know, between nexa, arena and then the other brands, inventory days overall, while as an organization we were at about 40 odd days in arena, the stock level since as of March is about 43 days.
Nexa has been a little higher and we have taken some steps to control it. Arena still even in April, May, arena continues to be in that range. Nexa, we engage them in terms of bringing it down right at the end of Q1, as we speak, in the beginning, if you talk about the current month.
The current month, if you talk about it, arena is around 37, 38 days and XYZ is about 40, 47, 48.
Unidentified Participant
Got it. And what’s the guidance, sorry, for the year in terms of inventory days, where will we look to end up?
John Verghese
So arena, we are looking at closer to about 35 days in terms of through the year in terms of inventory and NEXA about by June we should be bringing it down to about 41, 42 days and a lower number over the next three quarters.
Unidentified Participant
Got it. Sorry, just one last question. In terms of market share, you know, where would we be in terms of service market share, sales market share for the year. So sale should be approximate. You have to give Kerala and Chennai.
John Verghese
Yeah. So in terms of arena market share, we should be ending the year closer to about 24%. And then next site should be somewhere between. Between 21 to 22% in Kerala. In Tamil Nadu in arena we should be closer to 11 point. Between 11.5 to 12% and NECA should be about 21%
Unidentified Participant
Service we have a market share in Kerala around 31, 32% in terms of the service market share. But in terms of body shop we are at about 35, 36.
Unidentified Speaker
Hello. Hello.
Operator
Thank you very much. The next question is from the line of Madhur Rashleigh from Countercyclical Investments. Please go ahead. So your voice is very low. Can you please bring the handset a little closer to your mouth?
Unidentified Participant
Is it better right now?
Operator
Yes sir.
Unidentified Participant
Yeah. So they wanted to understand how would a margin profile go like look going forward considering the EV share that we are increasing as well as some improvement going forward. So this 5.1% margin that we have guided sir, can this increase even further as the EV share increases?
Let’s come to 5.9. 5.1 is a blended margin.
John Verghese
As you know we are spread across the commercial passenger car EV space and also again split between sales service where our focus is on the service pipe of our PV business. So that will we continue to focus on our service business. And hence we say that this going forward in the next three, four years we would like to increase this further from 5.1% further up EV.
I didn’t quite understand the question on EV but this basically is our strategy of improving IBITA margins.
Unidentified Participant
What would be the margins for EV and the JLR segment? What would be the EBITDA margin that we would be drawing currently? The EBITDA margins of JLR would be to the extent of foresk. Just a minute. JLR would be a good
John Verghese
JLR in terms of sales division is about 6% and in terms of service would be about 18%. In terms of EBITDA margins,
Unidentified Participant
Totally about 7. About 7 to 8, 9% is what we are getting. And what was last? 7%?
John Verghese
Yeah, 7.3, 7.6. Your voice is breaking, not able to hear clearly.
Unidentified Participant
Sir, what would be those margins like the 6% and 18% for JLR, what would be those margins for the EV segment?
John Verghese
So EV we have with Ather right now the two wheeler, it’s approximately about 4, 4.5% in terms of sales. 4% approximately. Which has actually gone up. Yeah, it has actually gone up from the previous year which was about 3%.
Unidentified Participant
So as we growing, as you know that we are growing with afil, we have not as you mentioned, as you already dictated, we got Lois in Kerala and Maharashtra. So the more we grow our top end, the EBITDA margins up cap will be improving. Okay, so from this current four, four and a half percent, where can margin grow?
Operator
Sir, sorry to interrupt, can you please rejoin for a follow up?
Unidentified Participant
I’m just getting a clarification sir, these four, four.
Operator
So can you please rejoin for a follow up?
John Verghese
Just to answer, I understood a question that four and a half will definitely go beyond 5% is what we expect in the near future.
Unidentified Participant
Got it. Thank you.
Operator
Thank you very much. The next question is from the line of Nilesh Doshi from Prospero Tree Asset Management llp. Please go ahead.
Unidentified Participant
Hello, Am I audible?
John Verghese
Yes sir. How are you sir?
Unidentified Participant
Fine sir. How are you sir? My question to you that we have just divested the Honda dealership and so we remain with the Maruti and JLR in PV segment. Would the company like to add another OEM in the PV segment or are happy with the two Maruti and jlr? We have given this guidance earlier also we have seen that we would like to grow in the sub 25 lakh segment or sub 30 lakh segment between Mikto is actually higher with Maruti and we have a large presence and that’s how we have expanded to Karnataka also.
John Verghese
And in the luxury segment we have set our growth primarily with jlr. But we’re also looking at one more brand if possible in terms of adding that luxury segment.
Unidentified Participant
So for luxury segment you are open to add another oem but for the lower premium or lower end car, Maruti is sufficient.
John Verghese
Yeah, because in terms of the strong market that Maruti has closer to about 41% across India. And in the markets that we operate like Kerala for example, they have a 55%. But more importantly as we stated even during the IPO and post, that is that the service that we build our volumes. On service and profitability on service in terms of ebitda, margins, everything. Maruti is one of the few manufacturers that has a very large car park across the country.
Unidentified Participant
So we stick to the Maruti but we will do the geographical expansion for the Maruti also.
John Verghese
Yes, that’s how we have now. We already increased state, we started with Kerala, we added Tamil Nadu about 15, 20 years ago. We have now moved into Karnataka. So we’ll continue to focus on geographical growth with money.
Unidentified Participant
Okay. And just to understand the industry dynamics, the last year the FY25 was not good year for any dealer, any car dealers. So is it the problem of lower demand or higher supply due to the large capacity or more number of OEMs?
John Verghese
So I think every once in seven, eight years this cycle happens where we expect demand to be at a certain level and demand falls off its lips for various reasons. One, in terms of, I think the prices of the cars over the last three, four years, especially in the smaller segment have gone up by 55, 60%.
Salary levels wouldn’t have kept pace with that. Even if you look at a 5, 6% salary increase every year, you’re talking about 15, 20% terms of salary increase. So there’s a gap there which will take some time to bridge. Getting production in line with this demand takes some time. So there is an inventory buildup and then it’s actually a vicious cycle because inventory build up, interest costs increasing, discount levels going up all seem to have hit in the same year which is a once in seven, eight years a month in nine year cycle.
I think last we had it in around 20, 16, 17 or 18. 17, 1718 types. So 16, 17. So this was, I mean probably once in a eight year, nine year cycle in terms of both inventory levels going up, discounts and interest costs. And interest cost didn’t help us because interest rates were higher and so consumer demand was also low.
Unidentified Participant
But this year we once again we maintained the inventory of FY24 level. But whether that inventory, 580 crore inventory is at the optimum level or still it is on the higher side.
John Verghese
So if you look at our in terms of each individual brand wide, some of the brands we have a slightly higher inventory at the end of March, but if you look at through the year couple of places, both in terms of Honda and in terms of Maruti and in terms of Bharatband, we held a higher inventory through the year especially from probably from July, August,
Unidentified Participant
Hoping that the festival season would do well, etc. Which didn’t materialize. So if you look at. You have to look at inventory in two ways. One, the march in inventory.
John Verghese
It’s a static figure which is a balance sheet figure that you look from FY25 March 31st to FY24th March 31st, which is a static. But if you look at through the year we have been even as high levels at around 70, 75 days in terms of some of the brands we have associated with which has got corrected to a large extent.
And I think Gautam had earlier asked in the call as to what is the guidance for the year which is why we said by Q1 by June end we we should be under in terms of marquee. In terms of arena we would be around 35, 37 days and Nexa about 4041 days which was one of our higher stock marathons which was higher through the year.
We already bought it down to about 30 days stock by March 31st and that we continue to hold in that way. Honda was a higher inventory for Q2 Q3 which has also been bought on. But anyway that doesn’t have an effect going forward since we are divesting it. And PIJO was a higher inventory at the JLR and Tata Motors we were, we had control inventory through the, through most of the quarters and we’ll go forward with the same guidance.
Unidentified Participant
Okay. And sir, my last question or the only thing that you have taken a much more corrective step to improve the result. I think the FY26 will be the definitely the better year than the FY20. Is it that that understanding is correct, sir?
John Verghese
Absolutely.
Unidentified Participant
Thank you and all the best, sir. Thank you. Thank you very much sir.
John Verghese
Thank you.
Operator
Thank you. Thank you very much. The next question is from the line of priest from Incred amc. Please go ahead.
Unidentified Participant
Thank you for giving me opportunity. Once again. If you could mention if you could quantify the discount amount which you give for the full year of FY25 and quarter four of FY25. What was the exact amount of the discount?
Unidentified Speaker
So FY24 full year average in arena was about closer to a 9.5 thousand K and then Nexa was slightly higher at about closer to 12k. Q4 per se. If you take it it should be approximately. Arena should have been from a yearly average of 9k had gone up to about 13 14k and Nexa from an early average of 12k had gone up to about 17 18k.
However when you look at April and May. April was for arena was about 5.5 K and May was about.
John Verghese
Okay, May still not completed. April was 5.5k for arena and Nexa was around 7 5k, which is what I mentioned earlier, also that we’ve been able to bring it down, you know, by 50% and we expect to hold it.
Unidentified Participant
If you can quantify the total amount of discount, total discount altogether on the basis of all the vehicles which we chose
John Verghese
For popular vehicles, we shirt out about nearly. The 50 crores discount in FY25 as a group we would have shelled out around 55 crores.
Unidentified Participant
Sorry. Yes sir. And what would be that amount in quarter code
John Verghese
In quarter scope would be. But I don’t have a figure right now so I can share with you.
Unidentified Participant
Okay. And one more. One last question from my end. You mentioned that the capex would be around 30 crores. And by divesting your Honda and Tiago business it would be you would be receiving around 70 crore jobs. So remaining particular crore you will be paying that date or if you can give any guidance on that level, are you looking down to reduce the date or what are your deadlines?
John Verghese
As IND mentioned earlier, we are looking at diversification. Sorry, not diversification on acquisitions. And some of these discussions are still on. And as you mentioned earlier, some may fortify in Q1 if not during Q2. So definitely those funds would be used for acquisitions.
Unidentified Participant
Okay. So sir, if you could bring some light on the acquisition, how much maximum debt you will be taking or what would be your tick debt levels that you will be going to internally.
John Verghese
We have a target that normally would like to keep our debt equity as 1s to 1 as we speak. In March we ended up with I think 0.67, 0.67 debt. So we have enough leverage for around 200 crores to ignite all to make to one to one as to one.
Unidentified Participant
Thank you sir.
Operator
Thank you very much. The next question is from the line of Amantadani from Solidarity investment managers. Please go ahead.
Unidentified Participant
Yes sir. Thanks for the opportunity. Sir, I have a few questions. How much services get me.
Operator
So your voice is cracking.
Unidentified Participant
Is it better now?
Operator
Yes.
Unidentified Participant
So sir, I have two questions on the services business. Sir, from what I understand is the service volume growth sort of depends on the car part of the city which is like built over the last 5, 8 years. Now with RP OEMs that is Maruti and Tata sort of losing market share up at some point the car park in a city would get impacted.
I’m not sure about timelines but if I take a longer term in that case, how should we think about the organic service volume growth from existing service sectors Given.
John Verghese
So I’ll give you a guidance on that. See. Right. We say that there’s been a little bit of market share drop. Actually Manpee has gained some market share similar to Tata Motors in heavy commercial vehicles, etc. But even if you look at, even if you assume that there would be a future market share drop of both these manufacturers, the volumes of cars being added continuously increases.
Plus if you’re looking at the growth of the Indian car market, so last year probably we ended up flat around 4 million cars per se. But by 2030 we expected to be an 8 million car market. So even the growth of the car market plus even with a lower market share still the numbers will be far higher than what we have today.
We have gone through the cycle in the past also and even in that cycle we have continuously increased our service numbers. So there was a point in which I think probably late 90s, when market share dropped to about 37, 38% and then went up again to about 40, 45%. But even at that time the service market share plus the service volume kept growing for us, similar to Tata.
Unidentified Participant
Actually what I’m not able to triangulate is let’s say Maruti’s volumes, let’s say keep on growing at very low single digits now 2, 3 or 3, 4% longer term maybe. So in that case when we get for that the 15% service business growth, I’m assuming 5% would be from ASP. So sort of to get that 10% volume growth, I’m not able to triangulate if market listed good at 3%, how would popular get that 10% volume growth longer term?
That’s my big question.
John Verghese
Okay, okay. So I’ll also give you an example, I mean not example, what has happened over the years. So starting with both in terms of GST and in of the cars, going from BS3 to BS4 and now further to BS6 and beyond, the technology in the cars became far more complicated.
So if you look at a large portion, so about 10 years back, the unorganized sector in for example in the state of Kerala had approximately 60% of the market share of services and 40% was from the organized sector which was market authorized dealers per se. Today as it stands about a year ago when we looked at the market share concept, 60% was from the organized sector and 40% was from the unorganized sector.
That is because in terms of training of manpower, the equipment that is required to invest in that, all that only the organized sector can do and only in large dealers like us, in terms of investment of that. So there’s been a shift from the unorganized sector, and it was also facilitated partly by the GST aspect, also where companies and other business owners, etc.
Wanted GST invoices too. Plus the complications, plus the training of manpower. So all these factors put together, there’s a shift from the. Sector to the organized sector and even now. So if you look at these service approximately, for example in Kerala, I think we service approximately 600,000 cars of Maruti last year. We have a 30% market share of the organized sector, which means There is about 1 point million, 1.8 million cars that were serviced in the organized sector. If you take 40% which is in the unauthorized sector, that fills up a large number and we’re looking at that shifting also. So this is happening across all states. So that factor is also added in terms of our volume growth. Just to add to that point what the MD mentioned, we also do various initiatives, marketing initiatives to open the service for not only how the vehicle will be sold, but also formulated. And hence if you look at it, we are ranked as the number one Maruti service dealer in the country. Whereas in sales we could be number seven or number eight. So there are many initiatives that we take to rope in the service businesses considering that that is the most profitable. And more importantly we also from the insurance angle, we try to get insurance of other dealer co dealers where we get the servicing. And one more aspect is that the servicing is not only the normal service that we do for vehicles. We also have something called the accident repair or the body shop repair where we get to vehicles to where painting, denting, all the kind of, you know, extra work that we have gets gets into our.
Unidentified Participant
That is very well explained sir. Thank you for that. So my second question is given we are place disproportionately focus on services and it’s a good strategy because it has a very high margin and it’s a higher ROE business and a lot of the service outlets that we have. As from I also in the past I just wanted to understand that why are other players like missing out on this service business acquisition opportunity given it’s such a good economics business.
John Verghese
See what we say that our USP for our group is the service business that we have. It is not something which can be replicated by any other dealership, especially the moment pop shops. This is over the 30 years or 35 years that we are in the business. We built up this USP which cannot be replicated.
So it comes from various factors. It not only includes the manpower skills, it includes training, it includes many other aspects which maybe we can explain in detail to you on a one to one discussion on a later call.
Naveen Philip
And even the size of our employee strength from where the employee referral comes. Also we over 10,000 people, a lot of relationships do not have that kind of a manpower strength.
Unidentified Participant
Thank you so much.
Naveen Philip
Thank you.
Operator
Thank you very much. The next question is from the line of Rishikesh Desai, an individual investor. Please go ahead.
Unidentified Participant
Thank you for the opportunity, sir. So most of my questions related to the service business have been answered, but I still have like. So is there any particular target that you have in mind when it comes to the service revenue? And also I would like to understand like what went wrong during the previous year in the services business where we’d like to decline. What is the first question?
John Verghese
What is the first question? What is the target for service revenue?
Unidentified Participant
Yes, yes. Do you have any target in mind when it comes to a certain percentage of overall revenue should be coming from the services revenue?
Naveen Philip
14%.
John Verghese
We were at 14%. But as we’ve given a guidance earlier also we would like to clock our service revenue growth in the region of about 20, 25%. And going forward we will achieve that in terms of the next couple of years. So that guidance remains the same. Though this year our value growth was only about 4%.
As against the guidance that we’ve given going forward, we’ll have that. In terms of what all went wrong in service, I think some of it is internal, which we have corrected both in terms of manpower and in terms of certain workshops underperforming. That is part one. So that is error that we made.
But more importantly, when the market slows down, and this as I said, one happened to month in about seven or eight years when the new car sales slow down, one of the things that gets impacted because of what is called as an insurance coverage ratio, that is the insurance premiums collected by the insurance company.
And one of our larger factors is our body shop revenue. And that’s where we have been focusing on in terms of our growth, et cetera. So that got impacted by pretty large number last year. We don’t see that happening this year. And we’ve taken some steps in terms of correcting that also.
Naveen Philip
Okay, okay. One point that we have to keep in mind as far as service division business concerned, it’s a highly operating leverage business. So when there’s a downfall in the top line, definitely the bottom line gets it much more heavier. Which there’s a flip flop side to it in the sense that when the recovery happens, definitely you know, that kind of extra delta benefit will happen in the bottom line.
Unidentified Participant
That was very helpful, sir. And my next question would be again, like you already mentioned that the organized players have increased their share in terms of service. Previously it was 60% unorganized, now it is 60% organized. So going forward, do you see that the service revenue would be more steadier and more resilient to the macroeconomic situation when compared to the autosense, which is more elastic in nature.
John Verghese
Absolutely. That’s true.
Unidentified Participant
Okay. All right, so that. That’s it for mine. Thank you so much.
Operator
Thank you. Thank you very much. The next question is from the line of Piyush from Akwinbi. Please go ahead sir.
Unidentified Participant
Wanted to understand even if we have a new vehicle slowdown this year similar to what we had last year, then we will have a much better year still because now you don’t expect a cliff drop which we had in FY25
Naveen Philip
Assuming that the inventory levels are maintained. As we just know what Raj mentioned wherein if you go back to FY25 the main hits were on discounts and interest costs. So assuming that, I mean I’m critical is that we can maintain the inventory levels to within that 30 or 40, 35 days as we mentioned.
Definitely it will be much better off in this year. And added to the fact of course we have grown in terms of when we have gone to Karnata. Now we’ve gone to Maharashtra with our other existing OEMs. So definitely FY26, even if there’s a very subdued growth in sales should look better than FY25.
Unidentified Participant
What would be the margins in the service business right now for FY25?
John Verghese
FY25, of course the gross margin is intact, it’s about 50%. But EBITDA because of the growth that has happened is come down to nearly about from a level of 16% EBITDA we come down about 12 or 13%
Unidentified Participant
In the in the previous. But rest all I think has remained more or less the same. We had a slight drop in the Honda business also in terms of ebitda from service JLR remained approximately 17 and 18%. Thank you sir.
Operator
Thank you very much. As there are no further questions from the participants, I now hand the conference over to management for closing comments.
John Verghese
Thank you all and we appreciate your participation in our earnings call today. In summary, we are actively taking the right measures and remain fully committed to achieving our growth target. Our long term vision and goals continue to stay on course. We trust that we have addressed all your queries.
Should we have any further questions, please feel free to reach out to Strategic Growth Advisors are Investor Relations advisors. Thank you and have a good day.
Operator
Thank you very much. On behalf of Popular vehicles and Services Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Sam.