Target: ₹525

CMP: ₹407.40

We initiate coverage on Pricol with Buy and about 32 per cent upside at 25x Dec-25E PER; we believe the stock price can potentially double in three years. Pricol’s strong market position in Driver Information Systems (DIS; about 65 per cent, revenue mix; 50/70/90 per cent market share in 2Ws/CVs/off-highway) with strong global and local digitization trends (democratisation of TFT screens) offers an attractive play on the multi-year premiumisation theme.

We build-in 22/34 per cent revenue/EPS CAGR on sustained high growth in content/vehicle; valuations at about 18x FY26E PER (below 1x PEG) are attractive amid net cash-positive BS, about 25 per cent return ratios, and transformation to multi-product company via expansion into adjacencies (e-cockpit, heads-up displays, telematics, BMS, disc brakes; not yet built-in) leveraging its strength in electronics/software.

We have not factored-in revenue from new product lines like BMS and connected solutions, which are currently in the proof-of-concept stage with various OEM clients. The management expects these to start contributing to the top line FY26 onwards; these pose upside risk to our estimates. We have built in combined capex spends of ₹650 crore over FY24E-26, with a net-cash positive BS, even after incorporating about 18 per cent dividend payout from FY24.

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