Pricol Ltd

Pricol Ltd

Auto Parts & Equipment

Wasted time in analyzing a sold company.

Market Cap.: ₹ 865.49 Cr.

Current Price: ₹ 91.30

Book Value: ₹ 35.98

Stock P/E: 10.06

Dividend Yield: 1.10%

Face Value: ₹ 1.00

Looks cheap look good going into sensor business that is great for future.

Truck business sensor etc

oil sensor etc

Company has reduced debt.

Company has good consistent profit growth of 20.21% over 5 years

Net Profit: 50 wth margin of safety

but profit is 80 and above this year .

cash crunch in the company 

17% profit growth is needed ? 

New logo new brand 

robotics printed circuit board

what about competition from china

GPS etc 

Clients:

John deer 

Renault nissan

fuel sensor 

telematic service gars

royal enfield 

bajaj  avenger 

force trax

Customers Kawasaki Thailand / Indonesia and Piaggio

with current major OEM`s – GM, Fiat & Volkswagen),

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

 TELEMATICS, BODY CONTROL & SECURITY SOLUTION

Telematics Control Units

Body Control Modules

Display & Infotainment

Park Assist System

 ASSET MANAGEMENT SOLUTION

Asset Tracking and Monitoring System

Cab Tilting System

o Centralized Lubrication System

o Digital Fare Meter, and Speed Governors

 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

 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

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

• Revenue breakup – 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

• Bullish Viewpoints:

o Industry specific:

 Automotive mission plan 2016 – 26 envisages a 4 time growth in value of auto industry

 Automotive component industry CAGR of 14% from FY 2013 – 14 to FY 2013 – 14 to FY 2020 – 21

 Automotive component industry to show robust growth to USD 115 billion by FY 2020 – 2021, contributing to at least 10% of India’s GDP, up from 7 % of GDP currently

 Exports to accounts for 26% of total Indian auto component market by 2021

– 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 “Smart” 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

– Revival of Mining & Infra industry – 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 “SMART” vehicles

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

1. 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.

2. Denso Pricol India Private Limited

o The Joint Venture performance did not improve as envisaged and continued to incur losses.

http://www.pricol.com/customers/domestic-customer/

Good number of customers almost al in some segment 

truck business and truck control 

http://www.pricol.com/customers/international-customers/

Harley Davidson, Honda,

A: This profit has been a result of the restructuring in the company over the last 3-5 years. We have focused on certain product groups, exited non-core products, we have taken a look at our cost structure, our manufacturing footprint and we have rationalised a lot of our work force to prune our costs and also looked at our manufacturing footprint, both within India and overseas. And that resulted in this much higher growth than what the market grew at.

And one of the other significant things is that we have an extremely low leverage on our balance sheet right now with the debt equity ratio of about 0.2 and that would also help us in leveraging our balance sheet for these acquisitions.

A: We have started seeing the wheels turn in the two-wheeler segment, which has been a little slow for the past two years. We are also spreading geographically in the two-wheeler space. We were primarily restricted to manufacturing in India and the Association of South East Asian Nations (ASEAN) region and we are now looking at expanding our geographies.

For your information, Pricol is the world’s second largest manufacturer of two-wheeler instrument clusters. We are looking at strengthening our customer relationships to grow a little faster than the markets.

A: We are looking at one acquisition this year and one acquisition next year. One of which is going to be in the sensors and instruments space primarily catering to the commercial vehicle segment and one in the oil and water pump catering to the replacement market in the commercial and the four-wheeler segment in Europe.

Altran acquires Pricol Technologies, an India-based 

Family owned

Briefing reporters, Vikram Mohan, Managing Director said, “The expansion and acquisition would cost us about Rs.500 crore. More than Rs.300 crore would be met through internal accruals and the balance through debt. We are not going to put money in real estate as we are planning to operate on asset-light model. We will approach industrial park developers who can offer us custom-built building as infrastructure. We will put the money into more productive assets like machinery.”

Currently, Pricol has eight manufacturing units located in India, Sao Paulo and Jakarta. It is planning to establish greenfield projects in Vietnam and Mexico. The feasibility study for establishing Vietnam plant was on and the plant would be ready by 2017. The plant in Mexico would come up after a detailed study of the market conditions.

Pricol is looking to acquire companies in pump and sensor verticals either in the Europe or the U.S. The management will consider those firms that score high on technology, leadership, customer base, finance and quality of manufacturing. It is looking at firms having revenue of Rs.200 crore – Rs.250 crore turnover.

Pricol got acquired.

Arghh.. I guess I can’t buy now. 

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