Popular Vehicles and Services Limited (PVSL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Popular Vehicles and Services Limited's Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. 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 the date of this call. These statements are not the guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Naveen Philip, MD and Promoter from the Popular Vehicles and Services Limited. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and thank you for joining us today for the Q1 FY '27 earnings call of PVSL. Joining me on the call today are Mr. Abraham Mammen, our Group CFO, Raj Narayan, our CEO; Amir Amlad, Deputy CEO and other members of our senior management team. Coming to the quarter, we have started FY '27 on an encouraging note. The improvement is the 1 that we started seeing during the second half of FY '26 has continued into the current year. Customer sentiment has improved meaningfully compared with the same period last year. The GST reforms announced in September '25, have continued to support affordability, particularly in the entry-level passenger vehicle segment. We are seeing better inquiries, healthier showroom footfalls and improved conversions. More importantly, our Q1 performance reflects a healthy combination of reported growth contribution from businesses acquired during FY '26 and a strong organic growth across our existing network. Before I get into the detail of Q1 -- in detailed Q1 of last year included, which was subsequently divested while the current quarter includes businesses and locations added during FY '26. Therefore, in addition to the reported numbers, we have also looked at the performance on a like-to-like basis after excluding Honda and Piaggio from the previous year base and on an organic basis after further excluding acquisitions and expansion. At the consolidated level, revenue from operations grew approximately 44% Y-o-Y, INR 2,890 crores. Total vehicle volumes increased at approximately 81%, while overall reported service volumes grew marginally by approximately 1%. But on a like-to-like basis, after excluding online Piaggio from the PVSL base, the revenue growth was approximately 52%, new vehicle volumes grew approximately 91% and service volumes grew 13%. The growth was broad-based across our new-vehicle business. In passenger vehicles, excluding luxury, reported revenue grew approximately 54% year-on-year, while new vehicle volumes increased approximately [ 8% ]. Service volumes were lower by around 5%, although service income continues to grow on the back of better realizations and higher value jobs. In luxury vehicles, reported revenue grew approximately 2% new vehicle volumes increased by 39% and service volumes grew approximately 87%. The addition of Audi has strengthened our luxury portfolio alongside the existing JLR business. In Commercial Vehicles, reported revenue grew approximately 35%. New vehicle volumes increased approximately 41% and service volumes grew approximately 15%. Sequentially, volumes moderated compared with Q4 and with the prevailing economic environment, but Y-o-Y performance remained healthy. In our EV business, reported revenue grew 113%. New vehicle volumes grew 153%, while service volumes grew 60%. It continues to see healthy customer acceptance supported by a wider network and growing installed base. So overall, the reported numbers reflect a significant increase in the scale of the company compared with the same period last year. Coming first to acquisitions. FY '27 is the first full year of contribution from the 3 businesses we acquired during FY '26. These include the Bharti operations of Bharti Motors in Telegana the bare operations of Globe CV in Punjab and the Audi operations date from Olympus Motors across Telia and Antas. Starting with RK, our Telangana market division contributed approximately INR 126 crores of revenue during Q1 FY '21. For a comparison, this business contributed approximately INR 151 crores during the full half year of FY '26 following the acquisition. Coming to BharatBenz operations contributed about INR 71 crores during Q1 compared to INR 150 crores across approximately 3 quarters of FY '26. And all the operations acquired from the Motors contributed uptown INR 20 crores from Q1 compared to INR 20 crores from the Q4 of last year. So across all 3 businesses, the current quarterly run rate demonstrates the scale up that has taken place since the acquisition about. Operationally, also, the performance has improved steadily. New vehicle sales have scaled faster while service throughput is recovering gradually as we rebuild the customer base and increase workshop utilization. The acquired businesses have now reached a much healthy operating level and are contributing positively at the EBITDA level. Our focus here from hereon is improving utilization, increasing service throughput and extracting further operating leverage. Acquisition-related depreciation and finance costs include Ind AS continuing to impact profitability below EBITDA. Therefore, the next phase is about covering converting the stronger operating performance into sustained reported profitability. This is consistent with what we had outlined earlier, FY '26 was largely a year of investment and integration, while FY '27 is focused on stabilization, scaling and improving profitability. As guided during our previous call, we expect the acquired business to achieve sustainable profitability at the PAT level from Q2 onwards. Importantly, the acquisition and geographic expansion have also helped us achieve one of the diversification objectives we had outlined earlier. In Q1 FY '27, the revenue contribution from Kerala or Keralam, as is now called, declined to below 50% for the first time. and our focus will be to sustain this more diversified geographic revenue mix going forward. Equally important is the performance of existing businesses because Q1 growth has clearly not been driven only by acquisitions. At a consolidated level, organic revenue grew 33% Y-o-Y and organic new vehicle volumes increased approximately 58%. Organic service volumes remained stable. In passenger vehicles, excluding luxury, organic revenue grew 49%, while new vehicle volumes increased 70%. Organic service volumes, however, declined by margin. Nexa continues to perform well, while Arena has also written the growth after being under pressure over the last couple of years. Improved affordability following the Decor has supported the entry-level segment, which remains an important market for us. In our existing luxury business, organic revenue grew 21%. New vehicle volumes remained broadly stable, while the organic service volumes increased approximately 9%. Our commercial vehicle business also delivered healthy organic growth with revenues increasing 21%, new vehicle volumes growing 34% and service volumes increasing by. And in EV, organic revenue grew at 54%, new vehicle volumes increased 57% and service volumes grew 43%. So the key takeaways from Q1 is quite clear. The acquisitions are scaling, while the underlying existing business are also delivering strong growth. Both are contributing to a significant improvement in our reported performance. Coming specifically to aftersales, this continues to remain an important focus area for us. While consolidated reported service volume growth was modest, there is some encouraging underlying trends. Within passenger vehicles, service volumes were impacted by the rationalization of low-value job cuts. However, service income grew supported by higher value jobs and better realizations. Luxury services recorded strong growth while EV services remained healthy. EV service volumes also continue to scale strongly as the installed vehicle base expanded. The acquired dealerships had relatively subdued service throughput when we took over these businesses. New vehicle sales have recovered faster, while service naturally takes longer because we need to rebuild retention, customer engagement and workshop utilizers. We are seeing improvement across these businesses, and as a large vehicle-based start flowing into our book shops, we expect service revenues to scale progressively. This is particularly important because services, repairs, spares and accessories provide recurring and higher-margin revenues and remain central to improving the quality of our earnings. Aside services, we continue to strengthen our spares and broader aftermarket business. We have established already have an established physical distribution platform with a sizable network and diverse customer base. During FY '26, we commenced distribution of 2-wheeler and passenger car radial segment, in Kerala and Karnataka. This allows us to leverage our existing madhouse distribution infrastructure and customer relationships. And also support the product objective of increasing the contribution from recurring and higher margin aftermarket revenues. During Q1, we also strengthened our network. We encompassed a new Service Center at in Kerala, 2 Tata commercial vehicle outlets at and a service facility at a the additional support our strategy of building a diversified multi-OEM multistate platform while deepening our presence across sales service in the aftermarket. Coming to inventory. We have continued to maintain a disciplined approach. New vehicle inventory base stood approximately 32 days compared with around 50 days a year ago and remained broadly around industry levels. What is particularly important is that despite the significant increase in revenue and expansion of our network, absolute inventory increased by only about 14% year-on-year. This reflects better inventory productivity and working capital discipline. Sequentially, inventory increase from March level, this was largely deliberate as a part of our preparation for the festive season and new launches by our OEM partners. So while we have built some inventory ahead of the festive period, the overall position remains significantly healthier than a year ago. Debt levels are higher compared to the same period last year, primarily reflecting the acquisition and network expansion undertaken during FY '26. We remain conscious of this, and financial discipline continues to be an important priority. With these investments that are largely in place, the focus on making the larger platform work harder through higher utilization, better working capital efficiency and stronger cash generation. Coming to profitability. Reported EBITDA increased approximately 87% Y-o-Y to INR 71.5 crores with EBITDA margins improving to 3.8% from 2.9% in Q1 last year. To provide a comparable view of the acquisition and divestment effect, adjusted EBITDA stood at INR 62 crores, approximately 82% increase Y-o-Y. At the PBT level, adjusted PBT stood at INR 11.2 crores while reported PBT returned to the positive territory at approximately INR 1.9 crores compared with a loss of INR 11 crores in Q1 last year. This is an important improvement for us. Acquisition-related depreciation and finance costs under India's continued to impact reported profitability, but as the acquired business scaling and operating leverage improving, we expect this impact to be progressively absorbed by the larger operating base. Other income during the quarter includes a one-off benefit of approximately INR 5 crores arising from lease modification relating to our Telangana operations. Overall improvement in both reported and ingested profitability is encouraging, and our focus from from here remains translating the highest scan into stronger margins, cash generation and the conditions. Looking at the demand environment remains encouraging as we enter the festive period. Pre-festive inquiries and showroom footfalls have been healthy across segments. We're also seeing healthy momentum across our key OEM partners with Marcus Tata Motors witnessing strong retail traction, while JLR continues to perform well in luxury. Our EV portfolio also continues to benefit from the healthy customer access. We are now entering an important period for the automine industry, beginning with Onam and Varahalaxmi followed by Ganesh Chaturthi, Navaratri and Dasara. With improving customer sentiment, new model launches and better vehicle availability, we remain positive on the demand environment over the coming months. At the same time, our focus will remain not only on growth, but increasingly on the quality and profitability of that growth. So summarize, FY '26 was a year in which we made significant investments to strengthen and reposition the business. Q1 FY '27 is beginning to demonstrate the benefits of those actions. We now have a wider OEM portfolio, a broader geographic footprint and a stronger platform across new vehicle services and the aftermarket. Our priorities remain clear, scale the business acquired last year, sustained organic growth across the existing network, improve service throughput, maintain working capital and financial discipline and increase the contribution from recurring higher margin revenues. We believe these actions will enable us to build a more resilient and profitable business and create a sustainable long-term value for all our stakeholders. Before I hand over to Abraham, I would like to take this opportunity to thank Raj for his valuable contribution to PVL over the years. As this should be in the last earnings call with us on behalf of the Board and the entire team, I wish him the very best for the future. a continue the organization until the end of August to ensure a smooth transition by the process of identifying a subsidiary is underway. With that, I would now like to hand over the call to Mr. Abraham to take you through the operational and financial performance for the quarter in greater detail.

Thank you. Thank you, Naveen, and good morning, everyone. I will take you all to the company's operational and financial performance for quarter 1 FY '27. Before I start, please note that Honda's CRC borrowing revenue was to August 2025 only. The key highlights of quarter 1 FY '27 in the passenger vehicles, new vehicle volumes stood at 10,475 units, up 82% year-on-year. Total income from the segment stood at INR 836 crores, up 73% year-on-year. The service volume stood at 1,90,801 units, down 5% year-on-year. The total income from the segment stood at INR 169 crores, up 11% year-on-year. Commercial vehicles, new vehicles stood at 3,495 units, up 41% year-on-year. Total income from the segment stood at INR 564 crores, up 33% year-on-year. Service volumes stood at 52,647 units, up 15% year-on-year. Total income from the segment stood at INR 107 crores, up 47% year-on-year. In the EV segment, new vehicles stood at 3,330 units, up 153% year-on-year. Total income from this segment stood at INR 55 crores, up 122% year-on-year. Service volumes stood at 30,232 units, up 66% year-on-year. Total income from the segment stood at approximately INR 3 crores, up 12% year-on-year. Now moving to the financial performance. Our total income for the quarter stood at INR 1,902.1, up 44.6% year-on-year. EBITDA stood at INR 71.5 crores, up 86.6% year-on-year. EBITDA margin stood at 3.8% for quarter 1 of FY '27. On an adjusted basis, after accounting for the acquisitions and the divestment effects, EBITDA grew approximately 82% year-on-year to INR 62 crores while adjusted PBT stood at INR 11.2 crores compared with reported PBT of INR 1.9 crores. There was a reported profit of INR 1.4 crores in quarter 1 of FY '27 versus a loss of INR 8.8 crores in quarter 1 FY '26. The other updates, the statewide revenues revenue breakup for the quarter, Keralam 49%, Tamil Nadu 22%; Karnataka 12%, Maharastra 5%, Punjab 4%, Telangana 8% and Andhra Pradesh 3%. The recent awards and recognitions popular Matamoros India Private Limited was confirmed 4 awards at the Tata Motors National Dealer Conference has been Goa. Highest market share growth for the CV passenger market share growth CVC is higher sales for Tata Winger Spare Parts Process Excellence. That's it from my side. Now I would like to open the floor for questions and answers.

[Operator Instructions] The first question is from the line of Raghunandan from Nuvama Research.

Congratulations team for a strong set of numbers. And also thanks to Raj, sir, for all the contributions. On question, sir, can you talk about the demand situation given that in opening remarks, you highlighted upcoming Onam festival, how are you seeing the growth in inquiries? And how do you think the tone will get set for the festive period? Also, if you can indicate how do you see the growth expectation for H2 FY '27 for EV, PV and CV segments?

Thank you, Raghu. Thank you so much for the best wishes. When we look at the last a few days, the inquiries are on a growth of about approximately 20% compared to the last year same time. And when you look at the last month, it's in the range of about 17% to 18%. But bookings have shown a much higher growth at about 22% growth year-on-year at the same time and 20% compared to the last month. However, you keep in mind that in our major market Kerala, it's an inauspicious time right now, which finishes on the 16th of this month and 17th is when the auspicious with the Onam starts. So the actual kind of impact we will see from then only. And as far as the retail is concerned, it will really pick up after 70s because people would love to buy it only during the auspicious time. In terms of H2, in H2 was on a very high growth on the passenger car segment. In the last year, 2, I mean, now we are growing in the range of over 18%, 80% come year-on-year so far on most of the month. That may come down a little bit because of a heavy base, but still it will be on a growth and will not be on a degrowth. However, the actual numbers we will have to wait and see. Anything you want to add on something on the H2.

No, I think H2 numbers, I think will remain quite strong. And especially given the fact that the JSC reform happened on September 22. The numbers were muted in September. So H2 to H2 will see a strong growth. We have to look at data watch for the Q3 numbers because Q3 was where we had a significant growth in small card and across all segments. But as of now, in terms of customer sentiment, PBV and PV remains quite strong. There is a little bit of supply constraints on 2 aspects. One is on the EV side, we're still probably at probably about 5 days stock in terms of spare parts. And there are also supply has been a little bit constrained. At is a new launch that will happen of the Q3 in end of August, I think stronger numbers would happen. Spare parts and the service side, spare part remains a concern in terms of supply. So there is a short supply on the part and hence, a lot of vehicles getting stuck in the workshops. But overall customer sentiment in terms of new vehicle buy remains very strong.

Wonderful, sir. Good to hear that. Sir, on the second question, over the last 7 quarters, EBITDA margin has trended higher and currently at over 3% even excluding the one-time benefit, how do you see the margin journey in future towards 4%, 5% margin? How should the turnaround in acquisitions also contribute to the margins ahead?

While sequentially, the margins will go up, in terms of overall EBITDA margin hitting the 5% will take a long time because our commercial vehicle contribution has increased significantly, where the EBITDA margins are a bit lower. So while EBITDA -- absolute EBITDA numbers keep growing up, the percentage because if you look at -- as a percentage of revenue, commercial vehicles, our average ticket size is about -- close to about INR 17 lakhs. So the EBITDA margins as a percentage might reflect lower but strong growth in EBITDA is expected.

Got it. Got it, sir. And in terms of the new acquisitions, if you can throw some more light from Q2 onwards, performance is expected to improve. And over what period, over the next 12 to 18 months, do you think the profitability can reach the same level as the existing business?

Okay. So basically, when we look back, the -- what we had committed is that the businesses would breakeven in turn profitable to the second half of the year. The Globe business that we acquired sometime around August of last year, in fact, has actually broken even. They are actually positive. All of these businesses on an EBITDA level currently are positive. All of them contribute. If we put 3 auditions together, they are around INR 9.4 crores positive. The major impact that we actually find is below that in terms of the depreciation and the finance cost that we have. But having said that, the 2 businesses, RTS and Olympus, we are on track in terms of becoming profitable. By the end of Q3, we should actually start to actually see that becoming more profitable in terms of at a PAT level, right? So Olympus might take even 1 more quarter, but the acquisition in Telangana, the volumes and sales have picked up. The only reason that we actually are seeing a negative P&L there because the service volumes has not come up -- grown up as such. And that also, as Naveen mentioned in his opening remarks that it takes a little bit of time to actually pick up in terms of volumes. But we are expecting that to get on track by quarter 4 of this year.

Again, on the demand side, you have presence in several states catering to both the urban and rural customers. In any of the states, are you seeing any concern relating to rural demand because rainfall seems to be like not equally distributed, so any concerns? Or would you say that rural demand also continues to be strong?

So if I break it down into segments, passenger vehicle demand across all areas that we operate in, we see no issue in demand, be it Telengana, be it Karnataka, Chennai or Kerala. We have not seen any issue in demand. Commercial vehicles, on the other hand, we have construction, lack of demand in the construction sector, and that is across most areas. It's not restricted to a specific area. Part of it is because of significant environment concerns based in Kerala, Tamil Nadu, et cetera. But part of it is also in terms of construction slowdown that's happening across these. So the tipper segment in commercial vehicles, we are seeing actually a low to negative growth in terms of tipper segment. But the small intermediate like commercial vehicles, cargo segment, all are holding good. EVs across the areas we're seeing strong growth. The EVs in rural segment is still not picked up too much, but hopefully, that will also start coming on.

Well noted, sir, the future looks right and wishing you all the best for future.

The next question is from the line of Gautham Madhavan from FedEx Express.

That's on the great set of numbers. A couple of questions from my side. On the adjusted PBT of INR 11.2 crores. Can you just state exactly what are we adjusting for in those numbers? And the second question is just around the margins on EV and luxury. How do we kind of think about those margins going forward? And if you can give some sense of what is that looking like because of the acquisitions and the x of the acquisition?

So to answer your first question, Gautham, in terms of the difference between the reported and the adjusted and the reported number that on the EBITDA that is basically on account of the acquisitions that we've taken, the Globe, RKS and Olympus, the EBITDA is actually INR 9.4 crores, Globe has given us an EBITDA of 2.1%, RK has got an EBITDA of 7.4%, Olympus is neutral. But the impact of the depreciation and the interest cost, the finance cost that we have, depreciation, we've got an impact of close to INR 12 crores. And our finance, we have got a cost of around INR 6.8 crores. So when we net off the EBITDA 9.4% positive with the depreciation and finance costs, which is another 9.4% negative, you'll actually get a swing between the 11.4% and the 1.9%. So this is on account of the acquisitions that we actually have. So Globe is actually neutral in terms of profitability. At the PBT level, RKS has actually got a negative INR 5.3 crores and all of us has got a negative INR 4 crores. So that's the swing of the INR 9.4 crores.

Yes. Second question, Gautam, in terms of PV EBITDA numbers you want know.

Yes. Naveen, on the segmental numbers that you all have put out, I think PV has come in at 1.1% and luxury has seen a dip in terms of margins. If you can just throw some color on what is that because of the core business? And what I mean is ex of acquisitions? And then how much is the acquisition kind of contributing to dragging those numbers? Or is it something else that we're seeing?

Yes. So basically, in terms of -- if you look at JLR EBITDA in Luxury, we were at around 82 -- I mean, INR 8.2 crores in terms of FY '26 Q1. And we are approximately 10.5% in Q1 this year. But if you look at the ICR, the Audi numbers, we are at 0 in terms of EBITDA. So when you take the overall EBITDA margin, that blacks us out, but that could see a change over the next couple of quarters with the launches that are happening from Audi and the number is also significantly going up from Q2 onwards. In terms of the PV, we would have taken a dip from the Honda business. With Q1, we were -- there was a contribution of INR 4.2 crores. But overall, PV, we have gone from INR 9.4 crores to about INR 35 crores in terms of the market. But Honda, we would have a negative of INR 4.2 crores.

And Naveen just following up to that, how should we think of the segmental PV, passenger car margins going forward for the year? Is there any guide that you can kind of give us on that?

So we are seeing a strong growth in both our Mark business. So market business across all segments, including service also. So in terms of -- currently, we are at around 4% in terms of PV segmental EBITDA -- I mean, not segmental PV EBITDA as much. So that should keep forward, Q3 and so with Audi also coming in line. So Maruti business will continue to grow, and both JLR and Audi together will also have a higher EBITDA contribution.

Got it. Just 1 last question for me, Naveen. Given the current scale of your business and just the national presence, how would we be ranked nationally in terms of dealership from Maruti? And is there any -- if we just could think through some of the benefits that will flow through by virtue of that? Or is there nothing really that we should expect on that front?

So we have taken a slightly conservative view in terms of overall the year-end revenues in our year-end, what you call the incentives that we incurred because of our volume increase. As of Q1, we are #2 in terms of Maruti. Similarly, in Tata, we are close to #3. I mean #2, Barents again, #2 in we are #2. So each of these segments that we operate, we are in the top 2 positions across the nationally. And that in terms of the year-end incentives, should add a few -- I mean I should add to it. plus in terms of the operational benefits that we get in terms of consolidating over various consumers that we can give in terms of paint, oil, et cetera, which we are on negotiations. Some of it was sold because of the war situation. Most of the lubricant companies didn't want to take a view, a long-term view, which I'm not too sure if that view would change because the war seems to be going on, but we're still in touch with both the lubricant and paint companies to have a renegotiation on the long-term contracts. So that benefit would flow in. By -- overall in terms of a consolidated basis, we will be -- as we stand today, I think we would be #1 in terms of revenue terms all in here an as a delisting entity.

The next question is from the line of Himanshu Bysani from PinpointX Capital.

Congratulations on a strong performance. Sir, wanted to understand that we have previously guided for a 10% to 20% service volume growth, which was a minus 5% in quarter 1 Y-o-Y. So just wanted to understand what kind of numbers are we looking at for the rest of the year? And are we on the path of our guidance? And also, on the margin front, continuing on that, that volume growth from services would, in turn, increase our margins as guided, so how do we look at that?

Yes. So if you look at PV volume, though we have said 5% drop in Q1. If you remove the Honda numbers, we will be at a growth in terms of overall numbers in terms of service volumes. But if you look at in terms of ASV of service, we have actually grown by 15% in terms of ASV sales. So we've continued to give. In terms of volume, we are hoping to grow from Q2 onwards. July numbers have come in pretty strong in terms of growth. So we're hoping to maintain that. And from Q2 onwards, we wouldn't have the effect of Honda, so have Q2 onwards, we'll see a growth. Wouldn't say 15% growth, which we have guided, but we'll show -- we'll be having a growth of about 6% to 7% in terms of volumes. And in terms of ASV, we'll continue to grow as the volume mix in terms of new car sales over the last 2, 3 years, the average ASV of the new car has gone up, so even if you look at this year, Q1, if you look at the margin division, we have grown from 6.6% average ASV to 6.7% and from JLR from INR 1.07 crore to INR 1.26 crore, though you see the ASP reported in PV segment has a lower thing, that's because Honda was giving us an ASP of 9.3, which is over there in the system. But due to and we'll see that ASP increase also, and that would reflect in see numbers ASV and the volume growth would happen about 6%, 7% from Q2 onwards.

Understood, sir. And sir, what can that relate to in our margins?

So if you look at EBITDA margins of PV, we are at around 15.5% to 16% for Maruti, and we are about 17%, 18% for JLR. So that would continue to contribute as the numbers and the ASV goes up. That margin would contribute to overall EBITDA numbers. So that is why we have said that the 4% EBITDA that we have on passenger vehicles currently would keep edging upwards from Q2 onwards.

Understood, sir. So on the recent price increase, which has been taken by OEMs, what does impact have on our numbers? Do we get to keep some part of it? And what kind of margins than we have on that?

So if you look at the overall price increases by Maruti has been significantly very low, we think between 5,000 to 7,000 and most of the vehicles except in a few models which have gone up by about 10,000, 15,000. There is no major significant impact on our side, except that there is something called a dealer -- the base fund of reserve fund that is there, which we get some marginal positive on that, but overall price increase, not much of an impact either to give or to us in that manner.

Okay. Sir, on your inventory days being 32 and you have been telling the cost optimization. So the extra cash or the extra cash profit that we continue to generate. How does that help us? Are we looking to reinvest in Q2 growth or we are looking at to deleverage our books?

So basically, in the case of cash generated from the operations, the first effort is to actually repay and reduce the debt that is on our books. Currently, the only kind of the expense -- the CapEx spends that we have is more in terms of the replacement CapEx and the current projects that are in progress. So there's nothing that is really planned in terms of an acquisition can give an expansion at this point.

The next question is from the line of Shirish Pardeshi from Motilal Oswal.

Naveen and team, congratulations for good recovery. Looking at the numbers, I mean those numbers are impressive. You have good commentary on the future stake quarters. I just wanted to understand when I read back Onam is around the corner. So I'm just asking in the price increases, which is just getting implemented or executed, in that context, how the consumer behavior is changing over last year compared to this year? And obviously, the AP traction is building up. So can you say something about how the consumer is behaving, especially when the festive season is just getting started in the Kerala.

Shirish, as Naveen said -- as mentioned earlier, it has not been such a big hike in terms of absolute value, and it has not created any impact. It has not either slowdown or nay or booking or retail. Even after the Q1 closure, which is the number we've seen, even if you could take July per se, instant slightly more than the growth reported in Q1. And with O&M coming in, we are expecting a much higher one. So, so far, that has not impacted us not just in Kerala, any of our markets that we operate.

That's helpful. I just wanted to check, is the preference for mini entry cars is higher as compared to last year? Or is it the mix is moving towards EV.

Yes. No, no. The smaller cars have recovered. If you look at the location, the and the Wagon R that has really shown much higher traction and generous of it. Also doing very well, but there's some change happening and that the stock has slightly come down now. But otherwise, the entry-level segment is what is taken. Naveen was mentioning much earlier in his opening remarks that while Nexa was growing consistently for the past many years, Arena has shown a recovery. The reason for Arena showing a recovery is because of the entry-level cars largely are in the Arena portfolio. expecting that growth quarter because during this etireason, there's a lot of -- the percentage of the first-time buyers coming in is much higher. So across August, September, in September, anyway, last year was a dampener because people waited till 22nd of September to start purchasing. The first 3 weeks have been hardly entering because of the GST response announced at that time. So considering both basic growth we are expecting across August and September, where with all the festive offers coming in, the small car sales should show up a much fair growth.

That's exactly what I was taking because we have a base effect also. Okay. Anyway, I got it. Just last question on the inventory side, how much new price inventory has already slowed in? And maybe if you can give what is the current status of inventory we are holding for OEMs. OEMS across...

So if you look at Maruti -- today, if you look at resecting the forward months, if you look at August numbers, and then see July inventory level, we would be holding for approximately the entire August month inventory we'll be holding as of August 1. All other inventories are below approximately 30 days or so in terms of August, September outlook. In terms of Audi alone, we would probably have a slightly higher inventory, which we're hoping that in August and September, we would get rationalized to about 20, 25 days.

Really helpful, Naveen. And Raj, all the best to you.

Thank you, Shirish. Thank you very much.

The next question is from the line of Nilesh Doshi from Prospero Tree AMC.