Axis Securities has initiated coverage on automotive technology firm Pricol Ltd with a 'BUY' rating and a price target of Rs 935. The brokerage expects the company to benefit from premiumization and operating leverage. A key highlight is the board-approved demerger of the Driver Information & Connected Vehicle Solutions business into a new entity, Pricol Autotech Ltd, which aims to unlock shareholder value and allow for independent capital allocation.
Axis Securities Initiates Coverage on Pricol with BUY Target Rs 935
Axis Securities projects a 22% upside from the current market price of Rs 765, setting a target price of Rs 935.
The brokerage estimates Pricol's net profit to grow to Rs 475 crore by FY29E from Rs 251 crore in FY26.
Reader Takeaway: Pricol's market leadership in clusters and proposed business demerger drive the bullish case, offset by cyclical automotive demand risks.
What just happened
Axis Securities has officially initiated research coverage on Pricol Ltd. The firm projects strong growth through FY29, citing a forward PE multiple of 24x on FY29E earnings. The report highlights the strategic board approval to demerge the Driver Information & Connected Vehicle Solutions (DICVS) business into a separate entity, 'Pricol Autotech Ltd'.
Why this matters
The DICVS business currently accounts for approximately 61% of Pricol's consolidated revenue. The proposed demerger is a major value-unlocking event, allowing the two entities to pursue independent capital allocation strategies and command business-specific valuation multiples. Furthermore, the company’s dominant market share—holding 40% in domestic two-wheeler clusters and up to 80% in TFT clusters—solidifies its position as a preferred supplier to major OEMs.
Risks to watch
As an automotive supplier, Pricol remains vulnerable to cyclical demand fluctuations in the two-wheeler and commercial vehicle segments. Additionally, the company faces margin pressures from the potential volatility of raw material costs like plastics and rare earth metals. Its reliance on imported electronic components also presents supply chain sensitivity in an evolving global trade environment.
Context metrics
Axis Securities expects Pricol's net sales to rise from Rs 3,964 crore in FY26 to Rs 6,679 crore by FY29. EBITDA is forecasted to improve from Rs 469 crore to Rs 825 crore in the same period, supported by the integration of the Sundaram Auto Components' injection-moulding business and ongoing capital expenditure in the polymer segment.