Pricol Limited ($PRICOLLTD)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Conference Call of Pricol Limited. [Operator Instructions] Please note that this conference call is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Thank you. 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 fourth quarter and 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 belief 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 the opening remarks. We have with us Mr. Vikram Mohan, Chairman and Managing Director; Mr. P. M. Ganesh, Chief Executive Officer and Executive Director; Mr. Siddharth Manoharan, Group Executive Director; Ms. Madhura Mohan, Executive Director; and Mr. Priyadarsi Bastia, Chief Financial Officer. Without any delay, I request Mr. Vikram to start with his opening remarks. Thank you...

Thank you very much. A very good evening to one and all on this call today, [Foreign Language], ladies and gentlemen. I welcome you to the call to discuss the key financial highlights for the year ending 31st March 2026 and for the fourth quarter of the financial year '25-'26. The presentation has already been uploaded, and I hope all of you have had a chance to see the presentation. Nevertheless, I would like to give you some highlights of our performance. On a consolidated basis, our revenue from operations for the quarter that has just gone by has crossed the INR 1,000 crore mark to hit INR 1,077.9 crores with an EBITDA of INR 143.28 crores and an EBITDA margin of 13.29%. Profit after tax of INR 73.23 crores with a PAT margin of 6.79% with a basic EPS of INR 6 per share. For the entire financial year for the year ending 31st March 2026, our revenue from operations was just shy of INR 4,000 crores with an EBITDA of INR 42.91 crores with an EBITDA margin of 12.4% with a PAT of INR 250.80 crores, PAT margin of 6.33% with an EPS of INR 20.57 per share. I'm happy to report that we have been able to achieve these numbers with the dedicated work of our entire team in spite of the multiple headwinds that we faced this financial year. This financial year started off with the semiconductor crisis, followed by a rare earth magnet crisis, followed by the West Asia crisis. In spite of all of these headwinds, we have been able to deliver a decent set of numbers to you this quarter and for the entire financial year. Our revenue from operations on a consolidated basis because of our inorganic actions and organic growth has resulted in a 43.34% growth quarter-on-quarter on a comparable basis. EBITDA 62.27% increase on a quarter-on-quarter on a comparable basis. And for the entire year, we have been able to show an increase in revenue from operations of 51.24% and the EBITDA for the entire year has seen an increase on the corresponding prior period of 47.53%. With this, I'd like to move to the question and answers. As a matter of protocol, we'd like all participants to restrict themself to one question, so others have a chance to join the question queue. And if you have more than one question we request you to rejoin question queue, and you will be given chance. Before we start the questions, I'd also like to probably take a few minutes to talk about the outlook, where I have given quite a cautionary statement as part of the Chairman and Managing Director's statement after the Board meeting yesterday. The West Asia crisis, I think, is reaching a peak and the disruptions of the West Asia crisis or due to the West Asia crisis is also starting to hit not just the industry, but also the economy quite hard. April was reasonably okay because we had a lot of pipeline inventory, pipeline stocks and raw materials that were bought at earlier rates. The rupee is on a free fall. Polymer prices have gone up by about 55%. Aluminum has gone up by about 62%. The semiconductors have gone up by about 35%, memory control devices by about 28%. Freight costs are also spiraling out of control, both inbound and outbound freight. These are multiple headwinds, not just affecting your company, but the industry as a whole and the economy as a whole. All of you would have also seen Prime Minister's address to the nation on cutting back on consumption to save ForEx and stop purchasing gold, et cetera. So the situation is quite weak. But nevertheless, we are confident of crossing this storm also with the collective efforts of our entire team, the support of our customers, our suppliers and aided by a strong balance sheet. We continue to stay focused on mid- to long-term growth and are not scaling back on any investments whatsoever of capital nature, which will hamper the long-term and medium-term prospects of the company. We continue to invest as usual, heavily on R&D and on technology to keep developing new products and new technologies to keep us ahead of the curve compared to competition. So while we are not scaling back on any of our critical activities that is going to hamper the growth of the company. We do believe that there will be softening of earnings and slowing of the whole automotive sector on account of the geopolitical headwinds that are actually setting ripples across the world. Without further ado, we can move to the questions.

[Operator Instructions] Our first question is from the line of Jatin Chawla from RTL Investments.

Congratulation on a great set of results. My question is, how do you see your market share on instrument clusters evolve over the next 2 to 3 years? And the context is when we were doing channel checks, we figure out that in the largest OEM in the country, there is a group company which is entering the instrument cluster business. In one other OEM, there is some new competition that is emerging. So in that context, I wanted to understand how do you see your market share evolving over the next 2 to 3 years?

Good question. In fact, we just did a complete analysis of our share of business. We got an external market analyst agency to come and do a complete analysis of the market. And in fact, just last week, we had a workshop on that. We have maintained our market share by volume and increased our market share by value. Competition has always been there. Competition will continue to be there. And what differentiates Pricol from our competition is our heavy investment on R&D and product development, which is keeping us ahead of the curve. Will we be able to maintain the market share for the foreseeable future for the next 3 years? I do not see any dip in market share because we have got confirmed LOIs for most of the programs. So for the next 3 years, barring growth or slowing down of the market, loss of market share is not something that we need to fear about.

The next question is from the line of Sahil Sanghvi from Monarch Networth Capital.

Congratulations for very good numbers. My question is on the financials. So there is some restatement in the FY '25 financials if you look at the borrowing lines and few other line items. I can point it out specifically if required, but if one can explain what's the reason for that?

Mr. Sandvi, we'll get our CFO, Mr. Bhastia, to answer that question. There have been some changes in the corporate guidelines on how debt has to be treated, and I will request Priyadarsi, our CFO, to clarify on that.

Is on account of the change in the circular which came up saying that the items to be shown as borrowing, which the customer bill discounting and vendor discounting, which used to be classified under trade payable have been regrouped to borrowing. That is the borrow...

So just to give you a perspective, barring the supplier discounting and the customer bill discounting, which earlier was treated as trade payables now actual borrowings as it stands as of 31st March 2026, net debt is INR 63.11 crores.

The next question is from the line of Hitesh Goel from Origin Capital.

First question is actually based on -- can you give us revenue for FY '26 on the 3 segments like DIS, AC, FMS and PEL revenue?

Ganesh, our CEO and Executive Director, will answer that question.

I will give you on the total consolidated numbers an approximate number. On the DIS, our revenue is about 60% total revenue is coming from DCS. And ACS is about 20% and PCL would be about 20%.

Okay. And sir, basically, my question is also on the TFT LCD and analog mix basically for the industry.

Mr. Goel request you to rejoin the question queue, please, if you don't mind.

The next question is from the line of Aman Agarwal from Carnelian.

My question was basically on the new products and new businesses which we have focused on. Can you please share an update on the PV digital cluster, which we were focusing on with Mahindra and Tata Motors and also like in terms of creating new business on disk brakes and other verticals brake like how is the update there?

I'll answer it's -- okay, three parts to that question. First, PV digital clusters, we have grown significantly with Tata Motors. We are yet to make an entry into Mahindra. Today, about 75% to 80% of Tata cars are coming out with precurs clusters. And we are increasing our market share with Tata. In fact, the new Safari, which we launched the new CR, if I'm corrected, which we launched has even won us an award from Tata Motors for the development, which I was happy to receive from the Managing Director of Tata Motors. With regard to disc brakes, we continue to make steady progress with our key customers, and we are quite sure that we will meet the forecast that I gave for 2030 in terms of disk brakes.

The next question is from the line of Divyansh Gupta from [indiscernible] PMS.

One question regarding ABS, are we manufacturing only the sensors for the ABS or the whole ABS as a package and is there a plan to...

Let me just interrupt you here, Mr. Gupta. We are not into the ABS, okay? We intend at some time in the future when disk brakes become a mature product for us to get into ABS. At this point in time, we have not even commenced development or intend to commence development in the immediate future.

So my question was for that less than 125cc bike that you are trying to target because of the change in the regulations.?

No. We were never in the ABS product. We never intended to be in the ABS product in the foreseeable future also, we never -- even earlier, this question was asked in earlier meetings, and that's what we have maintained.

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

I had a question more on the growth side. So like you said that some softness is something that we see going ahead in the industry in general and for the company. So I think previously, we had a guidance of 13% to 15% growth of Pricol. And if I'm not wrong, we were targeting to double the revenues of 3PL on a base of '25. So are there any changes in this guidance?

Frankly, I think we should ask this question to Mr. Donald Trump on a lighter note because we really don't know how long this war is going to continue and what the impact is going to be, what crude oil prices are going to be like and what the rupee is going to be -- and if fertilizer imports are going to be curtailed, then agriculture output is going to reduce, which rural consumption is going to have an impact. So I wish I knew, but even I'm not aware. We are all closely connected in the industry and following it. But I can assure you that we will be continuing to grow at higher than the market growth rate. And with regard to P3L, I've given a guidance that we aim to double the turnover in 3 years after taking over the company. I think we are well on track to achieve that. We have won a lot of new businesses, and we are now creating capacities to cater to the new businesses from customers that didn't exist before. So we are well on track to double P3S business or probably even exceed in the 3-year time frame that I had promised.

The next question is from the line of Chirag Jain from Emkay Global.

You did mention about multiple cost pressures in your opening comments. So any thoughts in terms of how are we navigating from a margin standpoint over the next couple of quarters? Would that be largely an automatic pass-through to our OEM customers or there is some sort of negotiation happening? And if at all, how are the progress going on that?

The situation is evolving, Mr. Jain. There is a lag factor of 6 months. So we are only now getting corrections of ForEx for the Q3 of the last financial year. But having said that, we are not going with a normal route. In this case, we have expedited it and we have requested for supplementary invoicing and price correction to be done immediately. Most of our customers have taken note of it and still figuring out because the entire industry, they've all got together and as a trade body represented through to the OEMs. But please do understand the impact is so huge that they cannot pass on the entire thing to the end customer, who is the ultimate buyer of the, let's say, a bike, a motorbike. -- motor bikes up by INR 25,000, INR 30,000, which is going to -- demand is going to really soften or probably degrow. So I think personally, it will -- it's an evolving process. We have put out an active team that's engaging with our top 10, 12 customers to recover cost. I think it's going to be tight, people have to take. There's going to be a price increase on the vehicle. OEMs will absorb some of that shock. And I think considering a long-term partnership with the OEMs, we also have to absorb some of that shock. How much is that number going to be? And how long is this going to take is probably time will tell. But I think next quarter, we'll have a better idea of how much each of the stakeholders in this pie will take. We recover the entire amount from the OEM? I do not think so.

Next question is from the line of Rangan B, an individual investor.

Managing Director Mr. Mohan [indiscernible] Regarding the company's performance, I think what we have achieved is I think we will be having very satisfied because in the COVID set target something like that internal target, I think. But I find the margin on the employees this...

Mr. Rangan, can we just take it one question at a time, Mr. Rangan I like to thank you. Yes, 2022, I had given a guidance that for FY '26, we will hit the INR 4,000 crore mark with about debt equity ratio of less than 1:1. I'm happy to note we have hit that mark, but with next to no debt. So I'm happy that we've been able to deliver on the promise made to you 4 years ago right after COVID once we recovered. Mrs. [indiscernible] Mohan has stepped down as an active role from Pricol and I've taken over as the Chairman of the company. She goes on to become the Chairperson of Pricol Holdings, our holding company.

I don't have anything because I think I'm sat...

I know you may have another question, which I will forward answer, Mr. Rangan because this is your favorite topic. M old friend, I have known you for 14, 15 years. So I'm going to take the liberty of giving you a third answer also. As for our dividend policy, we eligible for paying out a higher dividend this year after the interim dividend -- but as a matter of caution, our entire Board met and deliberated on this subject yesterday. And we believe that we are having already declared an interim Golden Jubilee dividend of 200%, we felt it was good to conserve cash, knowing fully well that with all the amount of capital investments and the headwinds ahead of us, it was important to conserve cash. So this is something that we took a conscious call yesterday. We had the subject of the dividend and the entire Board, including myself, recommended that we retain it at the 200% dividend for the FY '26, see the performance for the next 6 months and then take a call on that subject. I know you probably were intending to ask that question because that's your favorite subject. So I thought I will preempt and answer that for the benefit of other investors.

Actually what you have done is a very extraordinary thing.I know that you have done nothing to be accomplished. I'm very happy about that.

The next question is from the line of Hitesh Goel from Origin Capital.

Sir, can you tell us what was the exports in FY '26? And you talked about exports being 20% of revenue, right? So when can we see that?

Let me clarify. Our desire was exports to be 20% of revenue. And I've always maintained in my earlier call, so that is one area where we fail to deliver. And our goal is to take it to 10% of revenue in the coming years, okay? And as we speak, it stands at around 7% of revenue.

Next question is from the line of Sahil Sanghvi from Monarch Networth Capital.

My question is, can you please give us details on the progress of your MOU with BOE Varitronix and also with Domino and the time lines, please, of commencement of commercial sales?

With BOE, work has already commenced internally on doing the back-end backlight module. Work is under progress on the equipment and the machinery and the buildings, and we will be commencing in about 10 to 12 months production. With Domino more like 18 months to 24 months is where we will be ready and the early stages of revenue will start tricking in, right? With regard to PYW, it's a technological partnership where we are using their select technologies to develop products for our existing customers.

And just a follow-up, if I may, on the BOE Varitronix?

BOE.

BOE yes, if I may, so what kind of contracts or what kind of revenue estimates? I mean, if you can give some direction, not the number, but maybe some order book that you have...

Any incremental revenue, it's only a backward integration that's going to strengthen our product offering.

The next question is from the line of Ashwin Patil from LKP Securities.

My question is regarding the [ AMS ] business, which we had guided for a 30%, 35% kind of growth in the last call. So are we still maintaining that particular outlook? And what would be the outlook for this particular business going forward, sir?

e We are working towards 30% growth and particularly with a focus on exports. But the headwinds since the last 2, 3 months, I'm not sure we will be able to meet those numbers because the rupee is on a freeball, -- the crude oil prices have gone for a toss. So like I said, I wish I was norm, but I think we need to wait till September to see when the world economy is going to come back to some degree of normalcy before we hit that, right? Under normal conditions, we should have hit a 30% growth rate year-on-year.

So what is our growth rate for this year till now? If less than 30%, then how much is the number, sir?

How much is the number for FY '26?

Yes.

Yes. I'll request Ganesh, our CEO and ED, to answer that for you.

FY '26, we have achieved a 30% growth rate. As our Chairman and Managing Director, sir, it is a little difficult for us to predict. Maybe after September, we can have a better answer in this.

Okay. So for FY '26, it's 30%, close to 30%?

That's right.

Next question is from the line of Preet Pilani from InCred.

Booking question. What was our revenue from P3L for this quarter along with the margin? And also if you could mention the revenue of [indiscernible] for the entire year?

I will not be able to give you exactly for disc brakes for the year it's still a later stage. P3L, Priyal can you just comment about the -- for the year, how much turnover we closed at.

For the year, P3L generated INR 924 crores and EBIT of 9.24%.

But part of this involved a business that had to be transferred back to TVS, which we have also completed the transfer as of February. So that segment of business of about INR 55 crores doesn't -- will not continue. That is not a polymer business, that is a forging business, which was operating, which we operated on contract.

And on non-brake side in AC segment, non-brakes?

Bulk of the revenue, 96%, 97% of the revenue comes from non-brake. It's about overall this year, it's about INR 750 crores.

And one last thing on raw material side. You mentioned that raw material...

Request you to join the queue, please. That's the protocol we've been following.

The next question is from the line of Vansh Modi from Swan Investments.

Congrats on a great set of numbers. I would just like to request if you could share the segmental numbers in the information between the vehicle segments?

Please get in touch with our CFO and whatever non-competitive data we'll be happy to provide.

Next question is from the line of Shubham Batra from Ambit AMC.

Congratulations on a strong set of numbers. Sir, just a bookkeeping question. In your stand-alone books, your other expenses have shot up by 32%...

Mr. Batra little slow. We're not able to understand you.

Sir, in your stand-alone books, your other expenses have shot up by 32% on a quarter-on-quarter basis. Any particular one-off that you want to call out?

I'll request our CFO to answer that, please.

Shubham, the expense if you compare quarter-on-quarter, yes, it has gone up. Two items which are contributing to that. One is ForEx, which is -- you know it has gone up to INR 95. And the other one is the freight because the freight cost is in line with the revenue increase, but these two are contributing to the increase.

The next question is from the line of Aman Agrawal from Carnelian.

My question was on P3L basically. So if I see last quarter, this is the number which our CFO sir gave, we made 11% kind of EBITDA margins in P3L. So can you guide like is this something sustainable? Or do we expect margin to revert back to 10%, 10.5% kind of margins in this business basically?

That's an interesting question, and that's a strategic call that I've taken also as Chairman of that Board that we will start forward investing in P3L in line with Pricor's strategy of investing in technology. So we are setting up a center of excellence in polymer technology. So we will be forward investing in that. And also for the new plants that are coming up, we will be forward recruiting of personnel and to commission those plants. So there will be a softening of margins over 2 years before the benefits of all of this start kicking in. So we will go back to normalized margins of 10% or so and then keep back up going back.

Got it. And if I can squeeze in one more question. Are we looking to get any more M&As basically? Like we had talking about more deals maybe in Plastic division. So is there anything we are evaluating and like anything we want to close?

Yes, we are. Yes, we are, but cautiously. Under the current headwinds, we are being very cautious about capital investments. And unless the quality of asset is top class with a good set of customers, with a good balance sheet, with a good management team and backed by good manufacturing facilities and coming with a decent ROI, we are being very selective. In fact, we had a very long discussion at the Board meeting yesterday on the various assets that we are considering and we have taken some calls and actually active negotiations and due diligence is in progress. That's all I can say at this time.

And this is on mainly plastic side or some other business segment?

It will -- we are evaluating multiple opportunities.

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

[indiscernible] Vehicle, what is it today and considering the new products and the pipeline that we have across the segments, how do we see it panning out over the next 3 to 5 years?

It's very difficult to answer that question, Mr. Nahar, because you have a INR 4,000 cluster in a Tata car and then you have a INR 30,000 cluster in a TVS BMW or BMW motorbike or you have INR 1,000 cluster and then you have INR 3,000 of plastics and INR 1,000-odd of [ FBM ]. So I think a broad-based question like that based on the CC of the vehicle or the OEM is very difficult to answer.

So directionally, considering the profile, do we think and considering the TFT mix that is changing, maybe we can double or 1.5 to 2x our realization in terms of content for vehicle?

For example, we opened our account with Honda on clusters on pumps and on plastics, right? Now so our content per vehicle from literally very low and Honda is going to go up very high. TVS, we are already very high, and we are now derisking by working on other customers. So yes, our intent is with about 10 strategic customers to keep increasing our wallet share so that we are at least 50% higher than what we are today in the next 3 years.

Right, sir. Sir, just if I can add one more question. What would be the CapEx figure for the next 3 years?

We are -- I'm happy to -- that's a good question. And in fact, I was wanting to use that as my closing note. I'm happy to inform that we have a very, very healthy pipeline of new business, both domestic and international across all our divisions, be it for AMS or polymer we are starting our next major cycle of CapEx this year as our previous cycle of CapEx has come to an end and our capacity utilization has reached a peak. In fact, so much so that in plastics, we are unable to grow this year because of lack of capacity, which is why you see the ROCE at a very high figure compared to what I had given guidance for because of sweating the capital assets. So we are starting a major cycle of CapEx. In fact, this year in itself, we have planned for about between INR 680 crores to INR 700 crores of CapEx to cater to all of our new businesses that we have won, new plants, new machines, so on and so forth, which will keep propelling us forward and to maintain this growth momentum. So there will be some amount of debt, as I mentioned, but a very healthy amount of debt. I'm always very conservative when it comes to debt. A lot of our investors keep telling us that I'm a little risk averse, but I prefer to remain that way. So we will have a debt equity ratio of probably about 0.5 or 0.6, not even hitting 1, and that's how we plan to operate.

Ladies and gentlemen, that was the last question. I now hand the floor back to the management for closing comments.

I'd like to thank everyone for participating and for some great questions. I'm sorry, I could not give a clear answer, especially with regard to the growth because it's affected macroeconomic factors, geopolitical factors over which we have no control. But the management will leave no stone unturned to recover all costs possible and control all costs possible to maintain earnings. But having said that, there will be some softening of earnings. This is the voice of not just recricor, but the voice of the industry. And this is going to be a short-term pain, and we just hope and pray that this entire geopolitical mess comes to an end sooner rather than later and all of us can focus on strategically growing the business for the mid- to long term. We stay committed to our mid- to long-term projections, our investments and our recommitment to technology. And in the polymer business, we are going to be investing in technology and converting it from a component maker to a value-added polymer player. And we do hope that those will also pay dividends like in our other divisions in the years to come. Thank you very much for your confidence in the company, and I look forward to connecting with you on the H1 call 6 months from now. Thank you. Good evening, [Foreign Language].

Thank you very much, sir. On behalf of Pricol Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.