Pricol Ltd. - Strength across the board - Company Update

We revise our target price to Rs 660 (previously Rs 590) and retain BUY rating on Pricol, driven by upward revisions in revenue and margin estimates along with the valuation rollover. Pricol delivered a strong operational performance in 2QFY26, driven by sustained momentum in premiumization. Sequential margin improvement at P3L stood out as a key positive. Going forward, robust traction in the Digital Instrument Cluster (DIS) segment is expected to continue and new business wins in fuel pump module and disc brakes is expected to boost the ACFMS segment. We believe Pricol’s strategy of expanding wallet share and diversifying its customer base at P3L remains firmly on track. Progress on the technology license arrangement with Domino S.r.l. remains a key monitorable. With the premiumization trend intact, Pricol is well-positioned to capture emerging opportunities and potential market share gains. At 21.7x 2QFY28E earnings, valuations remain attractive. Remain positive on Pricol .

Strong revenue growth:

Pricol reported standalone revenue growth of +14.1% yoy at Rs7.57bn (versus MNCL estimate of Rs7.42bn), primarily on the back of premiumization led growth. We believe this growth has outpaced the broader industry’s performance. Pricol Precision Products (P3L) reported revenue of Rs2.35bn versus Rs2.05bn in 1QFY26, marking a growth of 14.6% yoy. Effectively consol. revenue grew by 50.5% yoy (P3L acquisition absent in 2QFY25) to Rs 10.06bn.

Margins improve QOQ:

Pricol reported standalone EBITDA margins at 11.6%, +45 yoy and +10bps qoq. This was driven by lower other expenses and higher gross margins at a standalone level on yoy basis, partially offset by higher employee cost. Standalone EBITDA stood at Rs877mn, +18.7% yoy, +11.9% qoq. Effectively, Pricol reported standalone PAT growth of 7.2% yoy, +16.2% qoq at Rs455mn. EBITDA margin at P3L stood at 9.08% (versus 7% in 1QFY26).

Structural story remains resilient:

Pricol has established a robust technological foundation complemented by superior product quality, positioning itself distinctively in pursuing leadership within the 2W Digital Instrument Cluster (DIS) segment. The DIS business with Honda is currently in the ramp-up phase, while engagement with Yamaha is progressing positively, with the plant audit already completed. New business wins in fuel pump modules and disc brakes are expected to enhance growth prospects within the ACFMS segment. Although near-term capacity constraints are likely to limit revenue growth potential at P3L, the encouraging aspect is the sustained improvement in margins post-acquisition (from 6.3% to 9.5% as of Sept’25). Long term drivers remain firmly intact:
(i) continued industry outperformance led by market share gains and transition towards LCD and TFT clusters, 
(ii) customer diversification led growth at P3L, and
(iii) new business wins driving momentum in the ACFMS segment.  

Valuation and risks:

We revise our earnings estimates upwards by 2.6% for FY26E and 5.1% for FY27E, factoring upward adjustment in revenue and margin estimates. We forecast a revenue/EBITDA/PAT CAGR of 23.9%/25.1%/28.4% over FY25-28E. We value Pricol at 25x (unchanged) 2QFY28E earnings to arrive at TP of Rs 660 (previously Rs 590) and retain BUY rating. Risks: Slowdown in ICE/ EV 2W sales.

Company website: https://pricol.com/

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Analyst:

• Smit Shah - Research Analyst, Institutional Equities (NISM-202300068297)

Frequently Asked Questions (FAQ)

1. What drove Pricol’s strong revenue growth in Q2FY26?

Pricol’s standalone revenue grew 14.1% YoY, supported by premiumization-led demand and strong traction in digital instrument clusters. Consolidated revenue growth benefited from the P3L acquisition.

2. How did Pricol’s margins perform during the quarter?

Standalone EBITDA margin improved to 11.6% due to better gross margins and controlled other expenses. P3L’s EBITDA margin strengthened to 9.08%, showing healthy post-acquisition improvement.

3. What are the key growth drivers for Pricol going forward?

The company is expected to benefit from strong DIS segment momentum, customer diversification at P3L, and new business wins in fuel pump modules and disc brakes within the ACFMS segment.

4. What is the revised target price and rating for Pricol?

The target price has been revised to ₹660, supported by higher revenue and margin estimates and valuation rollover. The rating remains BUY as per the report.

5. What risks should investors be aware of?

Key risks highlighted include a slowdown in ICE/EV two-wheeler sales, capacity constraints at P3L in the near term, and execution of new technology partnerships.

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