Pricol limited – OEM automotive

Notes from the Q3 FY2023 concall whatever I could gather:

1. Sibros – Solution is ready, PoC is completed. Samples are with customer. Waiting for orders, may happen from FY24 onwards.
2. BMS – Solution is WIP and under evaluation.
3. Vision of the company is to reach Rs.4000 crore by FY26.
4. This quarter there was significant loss of production due to IC shortage, but it cannot be quantified. It has been regularized and we are back to normalcy now. There will not be any problem going ahead.
5. Generally, Q4 is better than Q3 in the auto sector.
6. Cannot say what will be the margin profile for new products.
7. Our revenue split – 65 % is from 2-wheeler generally and 35% is from 4-wheeler. This is how the auto sector break up also is.
8. Telematics is an integral part of DIS and is 65% of revenues, 35% is from Activation Control & Fluid Management Systems.
9. Exports – 12 % of revenues and remaining is from domestic market.
10. Caterpillar order (for large water pumps) has gone into mass production. It is a recurring order.
11. Our content per vehicle is going up continuously but cannot put a number on it.
12. Last 3 years there have been lot of cost escalations, but things are looking to ease out now. So, hoping margins should improve going ahead.
13. We are continuing to launch new products with a high focus on EV segment.
14. Growth is happening due to new products introduction.
15. Presently EV products % to revenue is less than 5 %, it was launched this year only but expect it to grow significantly in coming years.
16. Order books are robust but cannot put a number to it.
17. Investment in R & D are 4.5 % which is one of the highest in the industry.
18. Cost of development of new products – we charge our customers an upfront Design & Development cost.
19. Mr. Mohan, the MD of Pricol was not present in the call. He had missed the call last quarter also which was not appreciated by one questioner.

Overall, I find the company management answered the questions well. They are doing lot of things to generate growth. However, the company does not have pricing power (just like most other auto ancillaries). Institutional interest in the call was low.

(Disc.: No positions.)