Pricol, a key supplier of clusters and Driver Information Systems to major clients such as Tata, TVS, Bajaj, and Hero, holds substantial market shares, especially in the two-wheeler and commercial vehicle segments. In Q3 FY24, the company introduced new Driver Information Systems and provided clusters for leading entities like Hero MotoCorp, Tata Motors’ EVs, Switch Mobility, and Daimler’s buses and trucks. This follows their track record of supplying products for various other models in the past. Notably, since the transition to BS-VI emission standards in April 2020, there has been a notable shift from mechanical to digital instrument clusters, a trend that Pricol has adeptly embraced. This transition contributed to a 40% revenue increase in FY2020-21.
Renowned for its telematics solutions, Pricol has produced over 300,000 units, with its Driver Information System (DIS) segment accounting for 65% of total revenue in FY23. The industry inclination towards TFT clusters over LCD ones aligns with Pricol’s strategy, aiming to raise TFT usage to 20%. This strategic shift has positively impacted margins, particularly with the company’s venture into electronic clusters manufacturing since 2020, offering comprehensive solutions to its customers.
Outlook
With robust demand expected across various automotive segments, including 2-wheelers, commercial vehicles, tractors, and off-road vehicles, Pricol stands to benefit significantly. The company’s substantial market shares in these segments position it well to supply essential components. Additionally, there are ample opportunities for expansion in exports within the ACFMS segment. Hence, we advocate a “BUY” rating for Pricol, with a target price of Rs. 495 per share.
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