Event Participants
Executives - 4
Madura Mohan, P.M. Ganesh, Priyadarshi Bastia, Vikram Mohan
Analysts - 12
Bhavya Vyas, Chandra Mauli Muthaya, Hiten Boricha, Hitesh Goel, Jatin Chawla, Khush, Kritin Arora, Naman Gulacha, Nandan Pradhan, Preet Pitani, Prolin Nandu, Rajit Aggarwal, Sahil Jain, Saket Sarogi, Shivam Kabra, Shubham Batra, Siddhartha Matthew (individual investors included)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹1,083.58 crores | +23.46% YoY, aided by strong industry growth and new product introductions |
| EBITDA | ₹123.69 crores | +21.42% YoY; margin at 11.41%, pressured by West Asia crisis-driven input cost inflation |
| PBT | Not disclosed (grew 32.23% YoY) | Strong operating leverage despite margin headwinds |
| PAT | ₹67.02 crores | +34.34% YoY; PAT margin at 6.19% |
| EPS | ₹5.52 per share | For Q1 FY27 on ₹1 face value |
| Polymer Division Revenue | ₹249 crores | EBITDA margin of 7.8%, worst affected by polymer and LPG price inflation |
| Two-Wheeler Growth | 28% YoY | Outperformed industry growth of 23% due to multiple new product launches |
Geographic & Segment Commentary
DICVS (Driver Information & Connected Vehicle Systems): Grew ~25% YoY, maintaining a 5% delta over market growth. Holds 35-37% volume share in Indian two-wheeler DIS (largest), ~two-thirds share in CVs and off-road vehicles, and 8-9% in passenger vehicles (dependent on Tata Motors, where 8 of 10 Tata cars use Pricol clusters). Focus on maintaining leadership through demerger for agility in capital raising and technology partnerships.
ACFMS (Automotive Comfort, Friction & Mechanical Systems): Grew ~25% YoY, same growth clip as DICVS. Management targeting 10% growth over market (vs 5% for DICVS). Production commenced on disc brakes for a major Indian OEM, first business won for switches from Suzuki. Export business discussions underway with European and American customers; meaningful revenue contribution expected from FY28.
Polymer Division: Q1 revenue of ₹249 crores with 7.8% EBITDA margin—worst affected by raw material (polymer) and LPG price spikes. Growth constrained by capacity, not demand; ₹400 crores CapEx underway to double capacity from ₹1,000 crores to ~₹2,000 crores turnover. Won business from Honda, Royal Enfield, Ather, River, Simple Energy, Raptee; Yamaha acquisition in final stages.
Company-Specific & Strategic Commentary
Demerger of DIS Business: Announced demerger of driver information system business after 2+ years of strategic deliberation. Rationale: rapidly changing human-machine interface technology requires large capital investments and potential technology/capital partners. Different business verticals have different investment appetites, making it difficult to attract right investors in a merged entity. Demerger expected to provide agility for fundraising and partnerships; targeted completion in ~12 months, with internal operational separation beginning October.
₹700 Crore CapEx Cycle: Across 18-24 months: ₹400 crores for polymer vertical (new capacity, moving out of TVS campuses), ₹150-180 crores for DICVS, ~₹120 crores for ACFMS. New plants: Huzur, Mysore, Aurangabad (Greenfield), Sanand (Gujarat for Honda), Bhiwadi (NCR region). Polymer capacity to double from ₹1,000 crores to ~₹2,000 crores.
M&A Pause: Board decision to suspend active M&A for next 1 year to focus on demerger, capacity creation, and new product verticals. Management emphasized no distress asset purchases; will only consider quality assets at right value if compelling opportunity arises.
Polymer Technology Advancement: Setting up Center of Excellence in polymer technology (operational by May 2027). Investing in 2K molding, self-healing plastics, fiber-reinforced plastics. Backward integration into tooling giving advantages in customer acquisition (Honda, Yamaha, Royal Enfield).
New Business Wins: Mahindra engagement initiated in DICVS (early days); Honda relationship expanding across plastics, DICVS and ACFMS; switches first business from Suzuki; Ather, River, Simple Energy, Raptee, Royal Enfield acquired in polymer.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 12.5-13% steady-state | Management believes ~1.5% EBITDA margin lost in Q1 is recoverable; improvements expected in Q2 and Q3 through indexation (75% of revenue in Q2, balance in Q3, pursuing quarterly indexation) |
| Revenue Target | ₹8,000 crores by FY31 (CY30) | Combination of organic and some inorganic growth; maintained across all businesses |
| Polymer Growth | 2.5x FY25 base revenue | Capacity doubling from ~₹1,000 crores to ~₹2,000 crores; plants on schedule despite minor delays |
| DICVS Growth | Market +5% delta | Sustained over coming years |
| ACFMS Growth | Market +10% delta | Aggressive growth; exports to yield results in 2-3 years |
| Disc Brakes & Switches | Revenue from FY28 | Currently ramping up production |
Risks & Constraints
| Risk | Context |
|---|---|
| West Asia Crisis / Geopolitical | Resumption of war in Iran region impacting input costs—polymer prices, LPG prices, freight rates. Shipping providers indicate rates will remain high for next 4 quarters. Management characterizes lost earnings as "delayed" rather than lost, with recovery through indexation. |
| Rupee Depreciation | Rupee at all-time low against USD (~3 digits possible per market indications). Significant import dependence for electronic child parts will continue hampering profitability until recovery through indexation. |
| Input Cost Inflation | Memory control device prices rising sharply quarter-on-quarter due to AI revolution demand. Crude oil prices firming, expected to increase further. Minimum wage increases in 3 states (~₹21 crores annual impact) - management still negotiating absorption with customers. |
| Volume Disadvantage in E-Cockpit | MNC competitors (Nippon Seiki, Continental/Aumovio, Denso, Visteon) have 40-50x volume advantage, eliminating cost arbitrage potential for Pricol in e-cockpit. This is a secondary driver for seeking partners. |
| Capacity Constraints | Polymer business growth limited by capacity, not demand. Honda wanted to give more business than Pricol could accept due to capacity constraints; business being taken in phases. |
Q&A Highlights
Demerger Rationale (Chandra Mauli Muthaya, Goldman Sachs)
- Question: What's the thinking behind the demerger, given the core business becomes a single-product entity?
- Answer: (Vikram Mohan) Two years of board deliberation. R&D for human-machine interface (integrating infotainment, climate control) requires large investments and potential partners. Different businesses have different investment appetites—merged entity made it difficult to attract right investors. Demerger provides agility for fundraising and technology partnerships.
Technology Partnerships & Past Denso Experience (Shivam Kabra, Carnelian Capital)
- Question: What gives confidence that technology partnerships will work this time, given Denso relationship didn't work out?
- Answer: (Vikram Mohan) Denso relationship was from 1980s-90s when Pricol lacked technology entirely. Now Pricol has DIS technology but needs partners for infotainment/control systems integration and global manufacturing presence (e.g., Mexico, Europe). Partner could offer technology fill-gaps, scale, or local manufacturing without large investments.
Margin Resilience & Outlook (Jatin Chawla, RTL Investments)
- Question: How did you limit gross margin decline to 160 bps given the RM situation, and what's the margin outlook?
- Answer: (Vikram Mohan) Polymer business took bigger impact than DIS; fixed costs amortized on larger top line. ~75% of revenue gets indexation in Q2, balance in Q3 (working to make everything quarterly). Minimum wage cost of ~₹21 crores annually still being negotiated. At least another 0.5% EBITDA in system through price increases and indexation, provided rupee and crude don't weaken further.
Steady-State Margin (Preet Pitani, InCred AMC)
- Question: What's the annualized margin level if current situation persists?
- Answer: (Vikram Mohan) Ideal margin is 12.5-13% steady-state "so that we are not losing business, maintaining our share." Lost ~1.5% EBITDA margin in Q1; that's the recovery target.
Segment Growth Breakout & Two-Wheeler Growth (Hitesh Goel, Origin Capital)
- Question: What was growth in ACFMS and DICVS separately, and two-wheeler growth within DIS?
- Answer: (P.M. Ganesh) Both DICVS and ACFMS grew ~25%. Two-wheeler grew 28% vs industry 23%, driven by multiple new product introductions in Q1.
CapEx Breakup & Timeline (Rajit Aggarwal, Nilgiri Advisors)
- Question: What's the CapEx breakup between proposed entities and FY27/FY28 timelines?
- Answer: (Vikram Mohan) ₹700 crores total over 18-24 months. Polymer: ₹400 crores. DICVS: ₹150-180 crores. ACFMS: ~₹120 crores.
Honda Business Ramp-Up (Shubham Batra, Ambit AMC)
- Question: How is business with Honda ramping, and what volume share in FY28?
- Answer: (Madura Mohan/Vikram Mohan) Business robust across divisions; recently won good share in plastics (total "handsome sum"). Actually put some business on hold—Honda offered more than capacity allows; taking in phases. Honda to be high-value/high-growth customer over next 3 years.
E-Cockpit Positioning (Naman Gulacha, Nirmal Bank Securities PMS)
- Question: Where is Pricol positioned in e-cockpit business?
- Answer: (Vikram Mohan) E-cockpit in two-wheelers unlikely in India (no real estate). Pricol developed proof-of-concept accepted by customers, but MNC competitors have 40-50x volume advantage. Focus on two-wheeler, CV, off-road where e-cockpit adoption limited. E-cockpit available as portfolio option.
Technology Partnerships—What Requires Partner (Prolin Nandu, Edelweiss Public Alternatives)
- Question: What can be done in-house vs requiring technology partnership, and are good partnerships still available?
- Answer: (Vikram Mohan) Infotainment integration and climate control systems require partners—ground-up development would take years and risk missing opportunity. Partnering also enables local manufacturing in geographies like Mexico/Europe without heavy investments. "Two-pronged approach"—one for technology, one for market reach.
Polymer Value Addition & ROC (Kritin Arora, Stallion Asset)
- Question: What product portfolio value-add plans, and what ROC for ACFMS?
- Answer: (Vikram Mohan) Moving up value chain with 2K molding, self-healing plastics, fiber-reinforced plastics. ROC will drop through heavy investment cycle, then return to 16-18% steady state. New plants: Huzur, Mysore, Aurangabad, Sanand (Honda), Bhiwadi.
Revenue Contribution & New Customers (Maulik Hitendra Singh Chaudhari, Monarch Networth Capital)
- Question: Revenue contribution of business verticals and PV customer updates?
- Answer: (Vikram Mohan/Madura Mohan) Acquired polymer customers: Ather, River, Simple Energy, Raptee, Honda, Royal Enfield; Yamaha in final stages. Switches: first business from Suzuki. Disc brakes: production started for major Indian OEM. Export discussions with European/American customers. DIS: initial engagement with Mahindra.
Growth Rate Outlook (Khush, Electrum PMS)
- Question: With capacity constraints, are growth targets intact for plastics/DIS/ACFMS?
- Answer: (Vikram Mohan) Plastics: 2.5x FY25 base on track—plants on schedule (1-2 month delays from steel/monsoon). DICVS: market +5% delta. ACFMS: market +10% delta; exports yielding in 2-3 years; committed export volumes already won.
TFT Penetration & Market Share (Preet Pitani, InCred AMC)
- Question: What's TFT penetration and market share across segments?
- Answer: (P.M. Ganesh/Vikram Mohan) TFT penetration in two-wheelers: 7-8%, expected to double in