Pricol - Minda Buys Stake From Open Market, Reaffirms Our Thesis Of Healthy Capabilities: ICICI Direct

ICICI Direct Report

Minda Corporation Ltd. on Friday, February 17, 2023 acquired 1.91 crore shares of Pricol Ltd. representing 15.7% of total paid-up capital for ~Rs 400 crore (~Rs 209 per share) from open market saying it was a financial investment.

We believe this transaction by Minda Corp in the secondary market has some strategic intent, which the acquirer has not yet clearly spelled out. Promoters at Pricol, however, have time and again conveyed their full support to the company with no intention to cede control or sell a stake.

Further developments in this space are awaited. However, it does clearly demonstrate the future content rise potential in digital instrument cluster space of which Pricol is a prominent player with proven technological capabilities, new tie-ups as well as customer relationships.

Key triggers for future price performance:

• Consistent focus on de-leveraging of balance sheet amid calibrated capex spends.

• Growing presence in passenger vehicle space with healthy wallet share at Tata Motors Ltd.

• With innovative product launches, customer wins and tech tie-ups; sales, profit after tax are expected to grow at 18.8%, 44.5% copound annual growth rate, respectively, over FY22- 25E. Margins are seen improving to 12.2% by FY25E.

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