Pricol hits record high on heavy volumes; surges 30% in last 10 sessions

Pricol is expected to register steady business performance on healthy demand for its products from OEMs and export customers and sustain its operating profitability at current levels, as per analysts

Shares of Pricol jumped 5 per cent to hit a record high of Rs 228.60 on the BSE in Wednesday’s intra-day trade due to heavy volumes. In the past 10 trading days, the stock of the auto components & equipments company has zoomed 30 per cent. Today, it surpassed its previous high of Rs 219, touched on February 17, 2023.

At 02:07 pm; Pricol was trading 4 per cent higher at Rs 225.65 as compared to a 0.83 per cent rise in the S&P BSE Sensex. The average trading volumes on the counter jumped three-fold. A combined 2.4 million shares, representing 2 per cent of total equity of Pricol, changed hands on the NSE and BSE.
 

Pricol is in the automotive components and products/equipments business. The company derives over 80 per cent of its revenues from OEMs, and 2W OEMs in particular. It enjoys strong relationship with OEMs and has a dominant share of over 65 per cent in 2W instrument clusters.

The company has capital spending plans of Rs 400-450 crore over the next 3-4 years to enhance capacity, mainly of new products, which are part of the productivity linked incentive (PLI) scheme, announced by the government of India, and also for routine modernization and refurbishment of lines. With steady accruals and control over working capital, debt levels are expected to rise modestly, leading to debt metrics remaining at adequate levels over the medium term.

On February 17, 2023, Minda Corporation announced that it had acquired 19.14 million equity shares of Pricol through an open market transaction for an aggregate amount of Rs 400 crore, representing around 15.70 per cent of Pricol’s total issued and paid-up equity share capital. Minda Corp has informed the exchanges that the share acquisition is purely a financial investment in nature, and that as of now, the company will remain a significant minority shareholder.

According to Crisil Ratings, Pricol is expected to register steady business performance due to healthy demand for its products from OEMs and export customers and sustain its operating profitability at current levels. The financial risk profile is expected to remain adequate supported by good cash flows from operations and prudent working capital management and notwithstanding large capex requirements.