Target: ₹735
CMP: ₹544.90
Pricol reported strong Q4FY26 performance, driven by premiumisation in instrument clusters, robust growth in ACFMS and P3L plastics business.
Driver Information Systems (instrument clusters) contributed 60 per cent to the total revenue in FY26 . ACFMS (Actuation, Control, Fuel & Mechanical Systems) contributed 20 per cent to the total revenue, growing at 30 per cent in FY26, with a focus on exports growth. The new product line of Disc Brakes is expected to enter mass production in H1FY27, with current capacity of 0.5 million units per annum. P3L (Pricol Precision Polymer Ltd) is witnessing strong demand but facing capacity constraints.
Backward integration in displays is likely to commence production in 10-12 months, while the Domino partnership (2W Throttle, Switches) would start contributing to revenue in 18-24 months.
Severe input cost inflation across polymers, Aluminum, Semiconductors and freight significantly affected margins due to partial pass-through to OEMs with a six-month lag. Near-term FY27 outlook remains cautious with limited visibility, slower growth and margin pressure due to macro and geopolitical factors, though the impact is industry-wide.
The stock is currently trading at a P/E of 24.0x/16.4x its FY27E/FY28E EPS of ₹23/ 33.7 respectively. We cut our target price by 10 per cent to ₹735, reflecting the cut in our FY27E earnings growth to account for the margin pressure impact in H1FY27E.