Pricol limited – OEM automotive

Pricol Concall Q4-FY23:

1. Revenue from operations has been the highest ever quarterly earnings. Production capacity enhancement in Tool room, Plastic Component Manufacturing Shop and SMT (Surface Mount Technology) for PCB assembly line by adding new machines from Japan.

2. Company has the target to reach 4000cr revenue by FY26. The company has an order pipeline for the next 3 years. EBITDA margins target of 15%. Company is confident of achieving it due to order pipeline (3600cr from the order pipeline and 400 cr from acquisition)

3. Company is focusing on 3 vehicle segments: 2W; commercial vehicle and passenger vehicle. Company has 70% market share in Tata’s passenger vehicle segment. Focus on the market leader in the global passenger vehicle segment.

4. Target of 70% revenue from DIS segment and 30% from ACFMS to contribute 30% segment by FY26.

5. Company is taking all legal measures to oppose the application of Minda at CCI as they haven’t obtained the intention at their first investment. Management will take all steps legally and financially to maintain the Pricol with the current management.

6. Management met with all their key suppliers and all the customers and made the position clear of Minda and Pricol with them.

7. India’s growth story will be muted in the next 3 years for 2W auto segments; the company’s target is export. Company has a LOI for next 30 months and on the basis of that company projected the target of 4000cr. The company is working on premium products so even at low volume growth the target will be achieved.

8. Company is EV ready and in touch with all EV players in India. Currently 8% revenue is from EV in the DIS segment. Working with 22 EV players in the country. Margins are same from EV as well; also share of EV will go up as EV adoption increases in India.

9. Company has 100% market share in TVS 2 wheeler.

10. For the target numbers company assumed 0% volume growth from India’s 2W segment as the company expects muted growth in India for next 3 years.

11. Company will do a capex of 600cr in next 2 years; most of these will be funded by internal accruals. Company may take 200cr short term debt as a bridge loan.

12. Company is the world’s second largest DIS manufacturer for 2 wheeler.

13. To unlock value for shareholders, if there is a need to align with some other company to get technology from MNC players, then Pricol may demerge into 2 different companies for DIS and other businesses. It is under discussion, no any work has been done on it yet.

Disc: no reco to buy or sell.