Pricol Ltd - Rs.37.00

Establised in 1972, Pricol Ltd. (Pricol), formerly known as Premier Instruments and Controls Ltd., is a reputed manufacturer and supplier of automotive instruments enjoying more than 50% share in the domestic market. In fact, it is the undisputed leader in the dashboard industry with current capacity of more than one crore units. Apart from dashboards, it also manufactures speedometers, cables, switches, sensors, control valve assemblies, oil pumps, windshield washer motor kits, heater ventilation, air condition control units, disc brakes and other precision machined components. Pricol, this produces 14 products catering to the two-wheeler segment, 16 products for cars and MUVs segment, 7 products for trucks segment and 16 products for the tractors and other vehicles segment. The two-wheeler segment contributes about 48% of its revenue followed by cars and MUVs at 34%. Its clientele includes all the leading auto players such as Ashok Leyland, Eicher, Bajaj Auto, GM, Hero Honda, LML, Maruti, M&M, Tata Motors, Toyota, TVS, Yamaha etc.

Pricol has five huge plants spread across India with three plants near Coimbatore, one at Pune and one at Gurgaon. Importantly, Japanese auto component giant, Denso Corporation, is the joint venture partner and has invested 12.5% in the equity capital of the company. Pricol also exports about 12% of its turnover to USA, Canada, Mexico, South America, Europe, Turkey, Egypt, Middle East, Asia, Australia, New Zealand, etc. To cash in on the growing demand in the automobile sector, Pricol is expanding its capacity by setting up a plant in Indonesia and Uttaranchal. The Uttaranchal plant, which may be ready by January’07 will manufacture 10 lakh sets of speedometers, oil pumps, fuel sensors and gear systems for Bajaj Auto in the two-wheeler category and around one-lakh sets of instruments and field sensors for Tata Motors and Mahindra and Mahindra in the cars and MUV segment. The Indonesian plant is expected to start production by December’06 and will produce around 8,50,000 sets out of which around 2,50,000 sets will be supplied to TVS Motors and Bajaj Auto. Pricol also plans to set up a unit in Iran to supply instrument clusters.

Due to stiff competition in the domestic market, the company is concentrating on garnering overseas business. It is also in the process of opening marketing and sales offices in Europe and USA. For FY06, inspite of a rise in the top-line by 7% to Rs.482 cr., its net profit declined by 20% to Rs.33 cr. However for June’06 quarter it reported a decent set of numbers with sales registering 20% rise to Rs.133 cr. and profit improved by 30% to Rs.9.60 cr. Hence for FY07, it may post a turnover of Rs.525 cr. with net profit of Rs.40 cr. on its equity of Rs.9 cr., which will translate into an EPS of Rs.4.50 against the Re.1 face value of its share. Although the share price may not see a phenomenal rise in future, still 50% appreciation i.e. a price target of Rs.50 can be expected in 12-15 months.