Amba Auto Sales & Services IPO

The company was originally incorporated on February 24, 2005 as “Amba Auto Sales and Services Private Limited”. It was converted into a public company on May 14, 2025 in preparation for the IPO and renamed “Amba Auto Sales and Services Limited”.

The registered office is located at Sy. No. 442/2A, 443/2B, 7, Hongasandra, Bengaluru, Karnataka – 560068.

The company’s core business includes:

• Sale of Bajaj motorcycles, scooters and electric vehicles

• Sale of Bajaj three-wheelers

• Vehicle servicing and repairs

• Sale of spare parts and accessories

• Insurance facilitation and financing support

• Extended warranty and maintenance plans

The company caters to retail customers, commercial vehicle operators, fleet buyers and small business owners across Karnataka.

Amba Auto operates in India’s automobile dealership ecosystem, particularly within the two-wheeler and three-wheeler market. This is one of the largest consumer mobility sectors in India.

India remains the world’s largest two-wheeler market. Demand is supported by rising urbanization, increasing disposable income, lower-cost transportation needs, and the expansion of electric mobility.

The dealership channel remains highly important because over 95% of two-wheeler purchases in India still happen through physical dealerships and showrooms. This strongly benefits companies like Amba Auto that have an established local distribution and service network.

The electric two-wheeler segment is also emerging as a major growth area. Bajaj’s Chetak electric scooter has been gaining traction across urban markets. Karnataka, especially Bengaluru, is one of India’s leading EV markets because of better charging infrastructure and higher consumer acceptance.

The Indian two-wheeler market is expected to continue growing due to:

• Increasing need for affordable transportation

• Strong rural and semi-urban demand

• Rising penetration of financing

• Higher demand for premium motorcycles and scooters

• Government incentives for EVs and cleaner mobility

However, the industry also faces headwinds such as volatile fuel prices, higher financing costs, rising competition from EV startups and OEM inventory pressure.

Amba Auto functions within the automotive value chain as a downstream retail and service company. It does not manufacture vehicles. Instead, it purchases inventory from Bajaj Auto and sells it through its showroom network.

The company’s business model is based on four major revenue streams:

The company’s target customers include:

• Salaried urban consumers buying motorcycles and scooters

• Commercial vehicle buyers purchasing three-wheelers

• Delivery and logistics operators

• Existing vehicle owners requiring servicing and spare parts

The company is strategically positioned because it earns recurring income not only from vehicle sales but also from servicing and spares. Service and spare parts businesses usually have higher margins and provide stability even when new vehicle sales slow down.

Its position in the value chain can be summarized as:

Manufacturer → Dealer/Distributor → Customer → After-Sales Service

Here, Amba Auto occupies the dealer and service layer.

The company operates in a tightly regulated environment. Since it is an automobile dealer and IPO-bound public company, it must comply with both automobile regulations and securities regulations.

After listing, the company will also need to comply with:

• Quarterly financial disclosures

• Board and committee requirements

• Related-party transaction norms

• Insider trading restrictions

• Shareholding disclosures

Major Business Risks

Financial Risks

Operational Risks

The company has also stated that its shares may experience volatility after listing because this is its first public issue. There is no previous trading history for the stock.

The promoters of the company are:

• Pradeep Kumar Lohia

• Rakesh Kumar Lohia

• Vikash Kumar Lohia

The Lohia family has built the company over nearly two decades and has played a direct role in expanding its dealership and service business in Karnataka.

These group entities are connected through common ownership or business dealings.

The likely role of these entities includes:

• Real estate holding for showrooms or workshops

• Vehicle distribution and logistics support

• Financing or related business activities

• Common management control

Since the company is family-controlled, the relationship with group entities is important for understanding related-party transactions and dependency risks.

The leadership structure reflects a promoter-led business where operational decisions remain closely controlled by the founding family.

Ahead of the IPO, the company strengthened its governance structure and constituted the mandatory committees required under the Companies Act and SEBI regulations.

All these committees were constituted in July 2025.

no major litigation appears significant enough to threaten the company’s continuity or the IPO itself.

Potential litigation areas typically include:

• Tax disputes

• Employee claims

• Consumer complaints

• Regulatory filings and approvals

• Property or lease-related disputes

Amba Auto has shown steady growth in revenue over the last three financial years, driven mainly by higher vehicle sales, growth in the three-wheeler business, stronger service income and expanding spare parts sales.

Revenue Trend

*9M FY2026 refers to the nine months ended December 31, 2025.

The company nearly doubled its revenue between FY2023 and FY2024. This was primarily due to:

• Strong increase in Bajaj three-wheeler sales

• Better realization from spare parts and servicing

• Improved showroom throughput and dealership scale

Revenue Mix

The business is still dominated by vehicle sales, especially three-wheelers, which contributed more than half of FY2025 revenue. However, the higher-margin service and spare parts segment is also growing rapidly and is becoming increasingly important.

Profitability Snapshot

The company’s profitability has improved faster than revenue. PAT increased from ₹124.79 lakh in FY2023 to ₹561.38 lakh in FY2025, indicating stronger operating leverage and better scale benefits.

As of December 31, 2025, the company had total outstanding borrowings of ₹5,741.79 lakh.

Most of the company’s borrowings are working capital loans and term loans used for:

• Inventory funding

• Showroom and workshop expansion

• Purchase of plant and machinery

• Vehicle stock financing

Major Secured Loans

These loans are secured against plant and machinery, furniture and fixtures. Repayment tenures range from 5 to 7 years.

A high working capital requirement is natural in the dealership business because the company must keep a significant inventory of vehicles, spare parts and accessories before sales occur.

The company’s cash generation is improving, but like most auto dealers, a large amount of cash gets tied up in inventory and receivables.

The company generates cash from:

• Vehicle sales

• Workshop and service income

• Spare parts sales

• Finance and insurance incentives

Cash is primarily used for:

• Buying vehicle inventory

• Repaying loans

• Expanding service infrastructure

• Capital expenditure for new branches and workshops

The company’s improving PAT and net worth suggest that operating cash flow has strengthened, although working capital consumption remains significant due to higher inventory levels.

The company’s ratios indicate that profitability and returns have improved sharply over the last three years.

*Calculated after considering bonus issue adjustments.

The rising return ratios show that management has been able to scale the business without proportionately increasing capital.

Management believes the company is well positioned to benefit from:

• Rising demand for two-wheelers and three-wheelers in Karnataka

• Growing penetration of electric vehicles

• Expansion in servicing and spare parts

• Increasing financing availability for buyers

The company’s growth strategy includes:

Management also believes that recurring service income will help protect profitability even during weaker vehicle sales cycles.

The IPO is entirely a fresh issue of up to 48.24 lakh equity shares. There is no offer for sale by existing shareholders. That means the money raised will go directly to the company.

The issue proceeds are proposed to be used for the following purposes:

The largest portion of the IPO proceeds is expected to go toward working capital and debt reduction, which is common for dealership businesses.

The company has disclosed that the pricing will be based on:

• Earnings per share

• Net asset value

• Return ratios

• Comparison with listed peer companies

• Growth prospects and industry outlook

Key Valuation Indicators

The company’s improving earnings and relatively high RoNW could justify a premium valuation, although investors will need to compare the final price band with other listed auto dealership companies before subscribing.

Before the IPO, the company has a pre-issue paid-up equity share capital of 1,34,92,800 equity shares of face value ₹10 each.

The IPO will consist of up to 48,24,000 fresh equity shares.

The fresh issue will dilute existing shareholders, but promoters will continue to retain majority control after listing.

Pre-Issue Shareholding

Post-Issue Broad Pattern

The issue itself will constitute 26.33% of the post-issue equity capital. Therefore, even after listing, the promoter family will continue to remain the controlling shareholder group.

Amba Auto has not adopted a fixed dividend payout ratio. The company’s stated policy is to retain earnings for business expansion, working capital and future growth rather than distribute a large part of profits as dividends.

Since the company operates in a working-capital-intensive business, management has indicated that profits are likely to be reinvested into:

• Vehicle inventory

• New showrooms and workshops

• Expansion of service capacity

• Reduction of borrowings

The Board may recommend dividends in future depending on:

The company has not paid significant dividends historically because it has focused on business expansion.

Because Amba Auto is a promoter-led family business, there have been related-party transactions between the company and promoter-controlled entities.

These transactions generally include:

The company has disclosed that these transactions were carried out in the ordinary course of business and on an arm’s-length basis. After listing, all related-party transactions will be subject to stricter approval and disclosure requirements under SEBI LODR Regulations.

The company has entered into several important agreements that are essential for its business operations and the IPO process.

The Bajaj dealership agreement is especially important because the company’s entire business depends heavily on maintaining its authorized dealer status.

After listing, shareholders will have the same rights as shareholders of any listed company under the Companies Act and SEBI regulations.

Promoters, however, will continue to control the company because they will retain more than 70% of post-issue shareholding.

These include:

Brickwork Ratings India Private Limited has been appointed as the monitoring agency for the IPO proceeds. This provides additional oversight and helps ensure that the company uses the issue funds for the purposes stated in the prospectus.

Amba Auto Sales and Services Limited is essentially a regional automobile dealership business with strong dependence on Bajaj Auto and the Karnataka market. Its financial performance has improved significantly in the last three years, especially in terms of profitability and return on net worth.

The IPO appears primarily intended to strengthen working capital and reduce debt. The company’s future growth will depend on:

• Sustaining vehicle sales momentum

• Growing the higher-margin service and spare parts business

• Expanding its EV presence through Bajaj Chetak

• Managing working capital efficiently

• Maintaining its dealership relationship with Bajaj Auto

For investors, the biggest positives are strong earnings growth and high promoter commitment. The biggest risks are customer concentration on a single OEM, geographic concentration and the working-capital-heavy nature of the business.