Popular Vehicles and Services Limited (NSE: PVSL) the automotive dealership group returns to quarterly profitability supported by passenger and commercial vehicle volume recovery. Strategic expansion into luxury segments and new regional markets continues to drive top-line growth despite near-term integration costs.
The company reported a significant recovery in its financial performance for the third quarter ended December 31, 2025. Total income for the quarter reached ₹1,791.8 crore, representing a 30.9% increase compared to the same period in the previous fiscal year. This rebound follows approximately 18 months of muted performance and was primarily driven by a 43.7% increase in new vehicle sales volumes. The company’s growth in the third quarter was bolstered by the integration of newly acquired operations in Telangana and Punjab.
Product Highlights
PVSL continues to expand its presence across multiple automotive segments. Electric vehicle (EV) two-wheeler penetration grew, with Ather Energy gaining market share and contributing to a 64.5% year-over-year increase in EV unit volumes. The company also entered into an agreement to become an authorized distributor for Balkrishna Industries Limited (BKT) in Kerala and Karnataka, covering the manufacturer’s two-wheeler and passenger car radial (PCR) segments. This move is intended to expand the company’s spare parts business portfolio.
Financial Performance
The company’s quarterly results indicate a return to profitability at the net level, though margins remain thin.
Revenue & Income:
- Total income for Q3FY26 stood at ₹1,791.8 crore.
- For the first nine months of FY26, total income reached ₹4,642.3 crore, an 10.9% year-over-year increase.
EBITDA & Margins:
- Adjusted EBITDA for the quarter was ₹61.7 crore, with a margin of 3.4%, up from 2.5% in Q3FY25.
Net Profit:
- Profit After Tax (PAT) for Q3FY26 was ₹0.7 crore, compared to a loss of ₹9.8 crore in the corresponding quarter of the previous year.
- The company reported a net loss of ₹7.5 crore for the 9M FY26 period.
Expenses & Inventory:
- Employee costs rose during the quarter due to the integration of Telangana and Punjab operations.
- New vehicle inventory levels were reported at approximately 19 days.
Balance Sheet:
- Total equity as of March 31, 2025, was ₹638.8 crore.
- Net debt to EBITDA stood at 2.2x.
Leadership Update
The Board of Directors has approved the designation of three executives as Senior Managerial Personnel at its meeting held on February 10, 2026, following recommendations from the Nomination and Remuneration Committee. The appointments take effect from the same date.
The executives designated as Senior Managerial Personnel are Aamir Ahmed, Deputy Chief Executive Officer for Telangana and Karnataka; N.C. Dilip Kumar, Group Marketing Head; and Gopikrishnan J, Head of Operations for Tamil Nadu.
Dealership Expansion
The acquisition of the Audi dealership business from Olympus Motors Private Limited is expected to strengthen company’s luxury segment and support medium-term revenue growth through a broader geographic footprint and an improved product mix. The acquired operations generated an estimated FY25 turnover of ₹120–150 crore. As PVSL assumed control from January 1, 2026, management expects the full-year revenue contribution to be reflected from FY27 onward.
The transaction adds five touchpoints across high-potential markets in Telangana and Andhra Pradesh, including showrooms and service facilities in Hyderabad and Visakhapatnam and a service centre in Vijayawada, enhancing the company’s presence in the premium and luxury category. A key strategic objective is to increase the share of luxury vehicle sales, which carry materially higher average selling prices (ASPs) and can lift blended realizations over time.
The acquisition also strengthens the after-sales network with three service centres, aligning with PVSL’s strategy of building stable, higher-margin service income streams. Management highlighted that luxury vehicles typically generate more predictable and higher-value service revenue across their lifecycle.
Luxury volumes were temporarily affected in Q3FY26 due to a cyber-attack at an OEM partner, but operations have since normalised, with management expecting a recovery in volumes from the subsequent quarter. While integration costs are likely to weigh on margins in the near term, the acquisition is expected to support a gradual recovery in profitability as scale improves, with EBITDA margins seen normalising toward the 5% range once the business is fully integrated and operating at steady state.
Investment Thesis: (Bull vs. Bear)
Bull Case:
- The recovery in entry-level passenger vehicle demand, which saw 35% growth following GST rationalization, suggests a turnaround in consumer sentiment.
- The company’s aggressive inorganic growth strategy through acquisitions in high-potential markets like Telangana provides geographic diversification beyond its core Kerala market.
- The high-margin service and spare parts segments continue to provide stability, with services contributing approximately 71% of company EBITDA despite representing only 21% of revenue.
Bear Case:
- Net profit margins remain exceptionally narrow at 0.0% for the quarter.
- Near-term financial performance is being weighed down by the high costs associated with network expansion and the integration of new dealerships.
- Passenger vehicle service volumes saw an 18.5% year-over-year decline in the third quarter, a softening attributed to lower new vehicle sales in previous cycles.
Strategy Focus
Popular Vehicles and Services Limited’s (PVSL) long-term strategy is anchored on normalising EBITDA margins toward the ~5% level through a more favourable product mix, a larger contribution from high-margin verticals and improved operating scale.
Popular Vehicles and Services Limited’s (PVSL) long-term strategy is focused on restoring EBITDA margins toward the ~5% range through product mix optimisation, geographic diversification and a greater contribution from structurally higher-margin businesses.
The primary margin lever is the expansion of Services & Repairs and Spare Parts Distribution. Although services account for roughly 21% of revenue, they generate about 71% of consolidated EBITDA, making them central to profitability improvement. Management is prioritising capacity and network expansion in these segments to lift the overall earnings profile.
PVSL is also pursuing premiumisation of its vehicle mix, including a higher share of luxury and premium models supported by the recent Audi dealership acquisition. This shift should improve blended average selling prices and create a more stable stream of high-margin after-sales revenue.
Geographic diversification remains a core objective. The company aims to rebalance revenue from a 74% Kerala concentration in FY21 to a roughly 50:50 split between Kerala and non-Kerala markets over the next two to three years through organic expansion and selective acquisitions.
While recent acquisitions in Telangana, Punjab and Andhra Pradesh have elevated the cost base in the near term, management expects operating leverage and integration benefits to support margin recovery from the next fiscal year. Additional focus on disciplined discounting, new model launches and digital tools to improve customer reach and retention is expected to support sustainable growth and profitability.