Pricol Limited (PRICOLLTD.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 Months FY '26 Conference Call of Pricol Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good evening, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Pricol Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and 9 months ended for the financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Vikram Mohan, Managing Director; Mr. P. M. Ganesh, Chief Executive Officer and Executive Director; Mr. Siddharth Manoharan, Director of Strategy; and Mr. Priyadarsi Bastia, Chief Financial Officer. Without any delay, I request Mr. Vikram Mohan to start with his opening remarks. Thank you, and over to you, sir.

Thank you, Purvangi. This is Ganesh here. Just a little correction. Mr. Vikram Mohan is not attending this earnings call. So Ganesh, myself, Priyan and Siddharth are there in the call. Thank you, Purvangi. Good evening to all. Welcome to the Q3 earnings call. I'm sure that you had an opportunity to go through the uploaded presentation. So I will straight away go to the key financial highlights. First, I will start with the Q3 revenue from operations. We are very happy that we have crossed INR 1,000 crore milestone during Q3. The EBITDA stands at around INR 125 crores with a growth of 12.19%. The PAT is at 6.24% growth and the EPS is at INR 5.22 as against INR 3.4 during the corresponding Q3 last financial year. On a 9-month consolidated level, the revenue from operation is at close to INR 2,900 crores with an EBITDA of INR 350 crores and a margin of 12.11%. The PAT percentage is at 6.15% and the EPS is at INR 14.57. Coming to the growth on a Q3 on a consolidated level, our sales have grown by 65.67% EBITDA has grown by 59.44%. On a 9-month consolidated revenue from operation has grown by 54.42%. And for the 9-month period, the EBITDA growth has been at 42.24%. Now I would request Purvangi to open the forum for the Q&A session. Thank you so much.

[Operator Instructions] The first question comes from the line of [Akhilesh Rawat] with Ridhanta Vision Private Limited.

Hello? Am I audible?

Yes, sir.

Yes. First, I would like to congratulate you guys on a very good set of numbers.

Thank you very much.

Yes. So my first question is, as you guys mentioned that like in last quarter, there is an Nexperia crisis going on. So could you please update us on like the current status of the issue or -- and is the disruption largely behind us? Or are there still some residual challenges have been faced? And like how should we think about the medium- to long-term operational impacts from here?

Akhilesh, thank you for the question. As explained during last time, we get passive components from Nexperia, China. And we were able to develop alternates for these passive parts during Q2 of last year, that is the current financial year. And then we have derisked all the components of Nexperia as we talk, we do not see any risk going forward because we have developed order rates and customer also has approved.

Okay. I mean that's related to. Yes. So -- and my second question is, as we are seeing that there is an up cycle in commodity prices. So like do we -- are we seeing like any adverse impact on our margins due to the rise in the commodity prices?

Akhilesh, on the commodity, we are indexed back to back 100% with all the customers. I think you're referring to the steep increase in the silver prices, right, something like that.

Yes. Yes. Yes. Overall commodity prices.

Yes. Overall commodity, we are 100% backed up with customer compensation. There will be only a lag of 3 to 6 months. However, it is all recoverable from the customer.

All the very best for the upcoming quarter.

Thank you, Akhilesh.

The next question comes from the line of Vijay Pandey with Nuvama.

Congratulations for a good quarter. A couple of questions from my side. Firstly, I wanted to check on the new products which we are planning to come up with. So the handlebar, the disc brakes, what is the current status at...

Sorry, Vijay, your voice is a little garbled. Can you just come closer to the mic and speak Vijay? We are not able to hear you.

Is it okay now?

Yes, it's better. Go ahead.

Yes. So I wanted to check about the new product or projects which we are coming up, so the handlebar, the disc brake. I assume that disc brake we launched last year only. So if you can just give a highlight about how this thing is moving. And in case if you can give a revenue breakup of disc brake and Pricol Precision.

Vijay, I will give you some brief of the disc brake. We started with start-up EV companies during last year. Last year was more of pilot run of disc brake. And from Q1 of the coming financial year, we would be starting with one of the large 2-wheeler OEM in India. So the start of production will be there during Q1 or latest by beginning of Q2. So as we know that, as explained during the previous earnings call, sooner or later, there could be mandatory condition coming for ABS for all the 2-wheeler irrespective of the CC. So we are expecting good growth to happen in disc brake in the quarters to come. And we are fully ready in terms of our mass manufacturing. We see good growth in the coming future. On the P3L, I would request our Director of Strategy, Siddharth, to give you some briefing. Over to you.

Thank you, sir. Good evening, Mr. Vijay Pandey. In P3L, as we communicated to you in the last quarter, we have been able to win more businesses from various customers in the last 2 quarters specifically. And we are actively creating new capacities. At this point in time, we are stretched for capacities, which is kind of hampering our growth temporarily for which we have also opened out our investments to create new capacities and just in the process of commissioning a new plant as well. So all this will enhance the business value in P3L in the upcoming quarters. And subsequently, in the next financial, you will see a good growth happening in that particular division as well. Further to that, we are also investing in a center of excellence, so to work on new technologies and value-added products for P3L for which work has been commissioned and first level of facilities has been set up and teams have been onboarded, which will start giving more revenue and new products in the next financial year or so. Thank you.

Sir, what was our revenue from...

Vijay can you please come in the queue because we have got a lot of participants.

The next question comes from the line of Jyoti Singh with Arihant Capital Markets.

Just wanted to understand on the margin side, like how much the margin pressure is due to new program ramp-up costs and EV investment? And another question is on the CapEx outline side. How much CapEx we are guiding for FY '27, '28 and the split between capacity expansion and EV tooling and automation side?

Jyoti, in terms of the margins, you would have seen that we have been on a steady-state margin. You could have seen in the past quarters, and we expect the same type of margins to continue in the future quarters as well. Coming to the CapEx, I think we have outlined that the CapEx will be around INR 500 crores for the next 2 to 3 years.

Okay. And sir, on the bigger picture over the next 5 years, do you see Pricol evolving more as an auto electronic company than a traditional auto component supplier?

So I think we have explained this in detail like we are a technology company in terms of our driver information system and also on the actuation and control management system and the new company, whatever we have acquired on the polymers. We will continue to invest in our engineering, which is currently about 4.5% of our total revenue. So we position ourselves in the next 5 years also as a technology company.

Okay. And just earlier participant asked question on the disc brakes side -- yes, I'm audible to you?

No. Can you please come in the queue, Jyoti. There are a lot of -- thank you so much.

The next question comes from the line of [Sreeram] with ithought PMS.

Am I audible?

Yes, Sreeram. Go ahead.

Sir, with regards to plastic products, is there any plans to get into non-auto plastic products? And when it comes to new products, what kind of complexity level or present in the new products which you are planning?

So Mr. Sreeram, to answer your first part of the question, at this point in time, our focus is largely on the automotive sector. Having said that, we have also onboarded a couple of customers who are in the industrial segment as well, especially in the energy meters and so on and so forth. As and when the opportunity comes up, we are constantly evaluating such opportunities, onboarding key customers.

Sir, with regards to -- with the complexity level of the new products, sir, as you mentioned in the previous con calls that you're planning to get into new products, including the plastic comment. So if any throw some light on the new products which will be coming in?

Yes. So we are also moving up the value chain, as I mentioned in my previous response. So we are setting up a center of excellence to work on certain new products and new technologies where we eliminate painting and do in-mold painting itself and such other technologies are also being worked on. And it will take at least a year or so to mature and then bring it into the market. And we are also looking at certain value-added assemblies in addition to just pure-play molding and painting as well. So that will all yield a better revenue and margin as we go along.

The next question comes from the line of Khush Nahar with Electrum PMS.

Sir, my questions are more on the new products, I think this is the telematics, the battery management system e-cockpit and recently, the MoU that we had signed, one was with BOE Hong Kong and the other with Domino for the handlebar. So some color in terms of when can we see -- be like what stages are these products? And secondly, when can we see some revenues contributing for us?

Thank you for your question, Khush. First, I will answer your question on the telematics. For your information, telematics has been as a product portfolio in Pricol for the last more than a decade. In fact, for your information, we are the largest supplier of telematics for the off-road vehicle. And for JCB, who is the largest in India, we are a live link supplier to telematics. So what we are looking at is an integrated telematics with the instrument cluster. That is the driver information system. That is the next level of technology that currently we are working with. We have given samples to the customers for validation. So in the next 3 to 4 quarters, we'll find some light into that. But as telematics stand-alone, we are already a large player in India. Coming to battery management system, as we explained during the last earnings call also, we have matured the product to a good level. And then we have given the samples to various 2-wheeler customers. And we're also in a final stage of the design and development with a large 2-wheeler customer in India. Like the disc brake, which is going to start of production from latter part of Q1 of this next financial year, the battery management system also will find a start of production in the next maybe 4 or 5 quarters. Currently, it is under development, okay? What was your third question?

BOE.

Yes, the partnership of BOE. BOE is a China-based company, not a Taiwan-based company. Khush, the agreement is to do backward integration of our LCD and TFT in Pricol. So as you know that currently, our business on the display has been on the continuous increase. So it is important that we start localization activity in India. So we have signed an MoU, which is exclusive between Pricol and BOE, who is the world's largest display maker to do backward integration in terms of our LCD and TFT development. And Domino is one of pioneer in making switches and throttles to various premium 2-wheeler customers in the Europe region. So currently, we are making along with them, a joint study in terms of the design and development of the switches and throttle in the forthcoming quarters.

Sir, just one follow-up on that. You mentioned that so BOE given the expertise. So my question was more around have we formalized the agreement in terms of any JVs? And accordingly, are we planning CapEx to set up this backward integration?

Khush, it is actually not a JV. It is an MoU, and it is an exclusive MoU, which has been signed between BOE and Pricol. You would have seen the notification in the stock exchange. So this backward integration is going to be exclusively supported by BOE to Pricol. That is how this arrangement has been made.

Right. So when are we expecting the investments for the same, the CapEx?

Investments will start from the next like 3 to 4 quarters.

We'll start production in the next 3 to 4 quarters?

Yes. Production will start from the next maybe 4 to 5 quarters. The investment will start from the next 3 to 4 quarters.

[Operator Instructions] The next question comes from the line of Karan Gupta with ACMIIL.

Yes. Good set of numbers for the quarter. Am I audible, right?

Yes. Yes. Yes, Karan. Go ahead.

Yes. So for the CapEx side, I think in the last quarter, you said INR 250 crores to INR 300 crores for the next -- for this year also and FY '27 also. But your long-term target of around INR 8,000 crores top line by FY 2030, right, '31. What kind of run rate you see for the CapEx side? And how much it will be the mix of equity and debt? So as of now, we have close to INR 100 crores of cash, right? And we are generating good free cash flow also. So how it will be the mix of debt and equity?

Karan, it would be difficult for us to arrive at a CapEx number till FY '31. As we explained in the next 2 years -- 2 to 3 years, we are looking at a CapEx of about INR 500 crores for the group.

And it will all be made through, client to be made through internal accruals.

Okay. So this quarter, we have finance cost increased significantly as compared to same quarter last year. So what's the debt right now? And how much we have increased in quarter 3?

I will request our CFO, Priyan, to explain this, please.

Karan, the interest cost, finance cost, whatever increase you see, these are all working capital usage. So we don't have any long-term borrowing in our current significance.

No. I mean the debt fee have increased in quarter 3, I'm just asking?

No, we don't have any borrowing -- long-term borrowing in our balance sheet settlement and whatever finance cost you are seeing these are all working capital, as you say, that is because of the large growth in our sales, so working capital has gone up. That is the reason.

The next question is a follow-up question. It's from the line of Vijay Pandey with Nuvama.

Just want to know the revenue for Pricol Precision in the third quarter and what will be the EBITDA margin?

Yes, Vijay. P3L for the quarter 3, they have generated INR 233 crores of top line with 9.33% of EBITDA margin. Thank you.

And sir, how are you seeing the demand in the -- now has been the euphoria of the GST cut has now gone. How are you seeing the demand in the 2-wheeler space, 2-wheeler and commercial vehicle space?

Vijay, the demand seems to be quite robust. Yes, we had a lot of good tailwinds during Q3, but the demand continues to be good. You would have seen the SEDA, whereby the 2-wheeler stocks at various dealers are at quite a low level. So we are expecting the demand to continue to be robust on all segments of the market, not only in the 2-wheeler, but in the commercial vehicle and also the off-highway vehicle.