Pricol (PRICOL) Surges 100% in 1 Year and 1,200% Over 5 Years: Is Now the Time to Invest?

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    <li>Pricol share price has surged over the years, giving out huge multibagger returns to its investors.</li>
    <li>Recently, brokerage house Monarch Networth Capital moved to an 'accumulate' rating for the stock and revised its target price to ₹500 from ₹465 previously.</li>
    <li>“We move to ACCUMULATE rating and revise our target price to ₹500, mainly due to an increase in multiple to 24x (previously 22x) and upward revision in margins, partially offset by reduction in revenue estimates, and the outstanding recent stock performance," the brokerage said.</li>
</ul>
<p><strong>Pricol share price has surged by about 100% in only a year and by over 1200% in the last five years, making it a noteworthy multibagger stock.</strong></p>
<h2><strong>Overall Decent Performance in Q4</strong></h2>
<p>According to an exchange filing, Pricol recorded a consolidated profit after tax of ₹41.50 crore for the quarter ending in January–March 2024. During the same time last year, the Coimbatore-based auto component producer reported a net profit of ₹29.80 crore. The net profit for the fiscal year that concluded on March 31, 2024, was ₹140.61 crore, compared to ₹124.68 crore the previous year.</p>
<h3><strong>Revenue Growth and Margins</strong></h3>
<p>Consolidated total income for the quarter under review increased to ₹588.51 crore from ₹525.37 crore during the same period the previous year. The consolidated total income climbed to ₹2,284.94 crore for the fiscal year that ends on March 31, 2024, from ₹1,963.14 crore the previous fiscal year. Pricol's revenue growth expectations were not met, according to Monarch Networth Capital's brokerage, mainly as a result of its OEM clients' delayed start of production. Due to manufacturing savings, adj. EBITDA margins were unexpectedly high at 13.7%; the brokerage anticipates these levels will remain between 13.5% and 13.5%.</p>
<h2><strong>Outlook Positive</strong></h2>
<p>According to the brokerage's analysis, it expects new launches and a return to normalcy of production delays at OEMs beginning in 1QFY25, with margins expected to remain between 13 and 13.5%. With seven clients served, Pricol has started producing disc brakes for sale with the goal of reaching a revenue milestone of ₹300 crore in the next three years. Several OEMs are being shown new technologies like ecockpit and telematics (in partnership with SIBROS).</p>
<h3><strong>Strategic Initiatives and Growth Prospects</strong></h3>
<p>Pricol is continually evaluating possible assets for purchase (during the due diligence phase) in an effort to reduce the risks associated with the automotive cycle and promote business expansion. In light of the 2w industry's strong growth indications (output increased by +22% year over year in April of this year), the brokerage expects Pricol to take advantage of both volume and premiumisation possibilities.</p>
<h2><strong>Valuation and Risks</strong></h2>
<p>“We forecast a revenue/EBITDA/PAT CAGR of 19%/22%/28% over FY24-27E. We value Pricol at 24x (previously 22x) FY26 P/E multiple to arrive at target price of ₹500 (previously ₹465) and move to ACCUMULATE rating. The increase in target price is mainly due to an increase in multiple and margins, partially offset by a reduction in revenue estimates. Risks: Slowdown in ICE/ EV 2W sales. We remain positive, though the recent stock price performance has reduced some of the upside," the brokerage said.</p>
<h3><strong>Conclusion</strong></h3>
<p>Pricol's impressive performance over the past year and its strategic initiatives for future growth make it a stock to watch. With a positive outlook from brokerage firms and a strong financial performance, investors may find it worthwhile to consider accumulating this stock. However, it's essential to stay aware of potential risks and market conditions that could impact its performance.</p>