Pricol Limited
CMP: 69.20 MARKET CAP: 655.99
Background:
Pricol Limited is an automotive components and precision engineered products manufacturer,Pricol Limited commenced operation in1974 with headquarters in Coimbatore, India. It manufactures automotive components for motorcycles, scooters, cars, trucks, busses, tractors and Off-road vehicles. Pricol also manufacture sintered components and product for fleet management solution.
It has following Subsidiary Companies
- Pricol Pune, India
- PT Pricol Surya, Indonesia
- Pricol do Brasil
- Pricol Asia, Singapore
Products
ο TELEMATICS, BODY CONTROL & SECURITY SOLUTION
o Telematics Control Units
o Body Control Modules
o Display & Infotainment
o Park Assist System
ο ASSET MANAGEMENT SOLUTION
o Asset Tracking and Monitoring System
o Cab Tilting System
o Centralized Lubrication System
o Digital Fare Meter, and Speed Governors
ο DRIVER INFORMATION SYSTEM & SENSORS
o Instrument Clusters
o Gauges
o Fuel Level Sensor
o Speed Sensor
o Temperature Sensor
o MAP Sensor
o Position Sensor
o Safety Switches
o Temperature Switches
o Power Sockets
o Oil Level Switches
ο PUMPS & MECHANICAL PRODUCTS
o Oil Pumps
o Water Pumps
o Fuel Feed Pumps
o Auto Decompression Unit
o Auto Fuel Cock
o Chain Tensioner
o Fuel Pump Modules
o Pressure Relief Valves
o Vacuum Switching Valves
β’ Revenue breakup - Market (standalone dated-2June 2016)
Products % Sharing
2-wheelers 52.8
3-wheelers 1.9
4-wheelers 11.8
Commercial vehicles 21.5
Tractors 6.0
Off-road vehicles 6.1
β’ Revenue breakup β products
Products % Sharing
Driver Information System 39.7
Sensor 15.7
Pumps and mechanical products 26.9
Telematics 1.3
Fleet management solutions 15.8
Others 0.7
β’ Bullish Viewpoints:
o Industry specific:
ο§ Automotive mission plan 2016 β 26 envisages a 4 time growth in value of auto industry
ο§ Automotive component industry CAGR of 14% from FY 2013 β 14 to FY 2013 β 14 to FY 2020 β 21
ο§ Automotive component industry to show robust growth to USD 115 billion by FY 2020 β 2021, contributing to at least 10% of Indiaβs GDP, up from 7 % of GDP currently
ο§ Exports to accounts for 26% of total Indian auto component market by 2021
o Company specific:
Segment Driver information system Pumps & Mechanical Products Sensors Asset management system
2W - Higher disposable income
- Scooters-favorable demographics
- India Export hub
- Shorter replacement period of 2W
- Increasing rural penetrations - Reducing fuel price to increase demand of entry level vehicles
- Regulations on emissions
- Fuel efficiencies - Regulations on emission & safety aspects.
- Increased need for βSmartβ vehicles. - Increased theft of 2W demanding the need for vehicle security systems in 2W.
3W - Exports to African & Asian countries and generates higher margins for OEMs - New licenses in NCR & Jaipur regions. - Emission regulation creates a drive for alternate fuels such as LPG. - Regulations on emission & Safety aspects. Not Applicable
4W PPV - Rising standard of living - Higher Income levels - Regulations on efficiency & emissions β Fuel efficient car
- Localization of Engine Mfrg. In India - Regulations on emissions & Safety aspects
- Increased Need fir βSMARTβ vehicles - Increased Taxi Fleet.
- VSS requirement as a measure if asset protection
CV - Economy growth - Infrastructure development
- Revival of mining industry - Emission regulation creates a drive for alternate fuels.
- Increase in M& HCV population drives need for Cab tilt products. - Regulation on emissions &Safety aspects
- Increased Need for βSMARTβ vehicles - Speed regulations imposed by Govt. β Need for speed limiters.
- Revival of Mining & Infra industry β demand for CLS products & VTS products.
Tractors & ORV - Govt. subsidies for farmers - India. Export hub for Tractors
- Infrastructure development
- Monsoon reliant
- Increased efficiency
- Revival of Mining Industry - Localization of Engine Mfrg. In India
- Increased penetration of tractors in lower acreage farms
- Tractors are also looked as material handling equipment - Regulations on emissions & Safety aspects
- Increased Need for βSMARTβ vehicles
- Revival of Mining & Infra industry β demand for CLS products & Telematics products
β’ MARGIN IMPROVEMENT [Point 1 and 2 will contribute 4% and points 3 and 4 will contribute 2.5% in coming years)
1 High Margin Markets & Segments
a. Increased focus on exports
b. Introduction of new products will demand high margins
c. Penetrate more into 4W PPV, CV, Tractors & ORV segment with a wider basket of product offerings which will help to increase margins
d. Acquisition of businesses which can yield better margins
2. Product Mix:
a. Differentiating products on roll out such as:
i. Emission/ Exhaust management sensing
ii. Driver information system for tractors & ORV
iii. Customized telematics solutions; applicable in CV, Tractors & ORV
b. Develop fleet Management solution product in line with regulatory requirements
3. Cost restructuring
a. Productivity improvement through automation
b. Reduce cost of quality through process improvements & automated EOL
c. Companywide drive- War on materials war on waste
4. Price recovery & consolidation:
a. Consolidation of loss making, Non Core and Non strategic businesses
b. Price recovery from customers through Forex, Raw material indexation & inflation increases
β’ With International Purchasing Office opening up aggressively in India by global players, there is a good opportunity for Pricol to sell its range of products to the same customers in multiple geographies
β’ Pricol has won a global contract for Oil and Water Pumps with Renault for their new A Entry vehicle which is common in India, Europe and Brazil.
Joint-ventures: (Annual report 2015)
- Johnson Control Pricol Private Limited
o The Joint Venture supplies Instrument Clusters to Personal Passenger Car and Utility Vehicles manufactured by Renault Nissan, Tata Motors, Mahindra & Mahindra, General Motors India, FIAT India and 2 Wheelers by Bajaj Auto in the Western Region.
o Reduction in passenger vehicle sales of Tata Motors and Mahindra & Mahindra. Increase in input costs could not be passed on to the customers and product mix change-over resulted in a loss of RS 66,900 Million before amortization of goodwill. - Denso Pricol India Private Limited
o The Joint Venture performance did not improve as envisaged and continued to incur losses.
o On 17th March, 2015 Pricol Limited sold its 49% of shareholding in Denso Pricol India Private Limited to Denso Corporation, Japan for a consideration of RS 200 Million. Subsequent to the sale the Company of Denso Corporation, Japan.
Share holding pattern:
April 30, 2016(investor presentation)
Promoters 40.21%
Corporate 16.34%
Mutual Funds 38%
FII 0.36%
DII 3.38%
Others 1.71%
Market cap Free float 393.60cr
P/E 477.71
ο¨ Phi capital trust β Phi capital growth fund β 1
ο¨ Rajesh Madhwan unni (HUF)
ο¨ Bank
ο¨ Financial Institution
ο¨ Anil Kumar Goel (reducing stake)
- Valuation:
o Ratios:
Particulars 2015 2014
Book value 28.221 33.95
ROA -3.15% 11.63%
ROE -6.12% 23.29%
ROCE -3.94% 25.17%
Fixed asset turnover 2.17 1.89
Receivable days 57.12 61.30
Inventory days 36.18 38.15
Payable days 67.29 73.83
Cash conversion cycle 26.00 25.98
Total debt/Equity 0.24 0.14
Interest cover -1.56 12.18
o P & L A/c: (Standalone)
Mar-15 Mar-14 Mar-13
SALES 949.66 891.15 873.89
SALES% 6.57% 1.98% -9.44%
EBITDA 23.97 62.95 62.14
EBITDA% 2.52% 7.06% 7.11%
NET PROFIT -18.00 67.00 15.74
NETPROFIT MARGIN -1.90% 7.52% 1.80%
NET PROGIT GROWTH -126.87% 325.67% -72.10%
EPS -1.90 7.16 1.75
β’ Standalone latest numbers
Mar 16 Mar 15
Net Sale 342.85 229.17
EBITDA 48.33 -7.40
PAT 22.07 -2.40
EPS 2.33 -0.25
β’ Consolidated numbers
Mar 16 Mar 15
Total Income 144.86 114.32
EBITDA 9314.32 -1271.57
Net Profit 127.15 (3600.87)
EPS 0.13 (3.80)
β’ Technical chart:
Disc: Not invested. Only educative purpose
