PPAP wins ₹429 crore in orders, but margins slip

PPAP PPAP Automotive Limited (PPAP) secured new orders worth approximately ₹429 crore in H1 FY27, including ₹157 crore of EV related orders. The order momentum is strong. But profitability has not improved at the same pace. Consolidated revenue from operations increased 29.8% year on year to ₹177.8 crore in Q2 FY27. H1 revenue grew 31.8% to ₹334.2 crore. EBITDA increased 23% to ₹15.7 crore in Q2. However, EBITDA margin declined to 8.8% from 9.3% a year ago. The gross margin pressure is more concerning. It fell to 39.8% from 45.6%, according to the company's investor presentation. This suggests that higher sales are not translating into proportional operating profit growth. Better operating efficiencies have helped, but have not fully offset the pressure on gross margins. The EV order wins are encouraging. They increased nearly 5.8 times to ₹157 crore in H1 FY27, compared with ₹27 crore in the previous year. But conventional automotive programmes remain important too. They contributed approximately ₹272 crore of H1 order wins. The company supplies components to major manufacturers including Maruti Suzuki, Tata Motors, Toyota, Honda and Mahindra. There is another distinction investors should make. Order wins are not immediate revenue. These programmes need to move into production, and the company must execute them at acceptable margins. My view: PPAP is gaining traction in EV-related programmes while retaining a diversified customer and product base. That is positive for its long-term opportunity. But I would not ignore the margin decline. If raw material costs remain elevated or customer price increases take time to pass through, the company could win more business without generating enough incremental profit. I would watch gross margin recovery, EBITDA margin and the conversion of the ₹429 crore order wins into revenue over the next few quarters. My stance: Positive on order momentum, but cautious on earnings quality until margins recover.