Pricol Limited: Navigating Growth and Innovation in H1 FY26

Pricol Limited, a key player in the Indian automotive components sector, has delivered a robust financial performance for the second quarter and first half of the fiscal year 2026. The company's consolidated revenue from operations for H1 FY26 surged by an impressive 48.89% year-on-year, reaching INR 1,865.59 crores. This strong top-line growth was complemented by a 34.24% increase in EBITDA, which stood at INR 225.22 crores, translating to an EBITDA margin of 12.07%. Profit After Tax (PAT) for the half-year also saw a significant rise to INR 113.88 crores, reflecting effective operational management and strategic initiatives.

The company's growth story in H1 FY26 is multifaceted, driven by both organic expansion and the successful integration of its recent acquisition. The plastics business, now operating as Pricol Precision Products Private Limited (P3L), has shown remarkable progress. Acquired with an EBITDA margin of around 6.3%, it has steadily improved to 9.5% by September 2025, with management targeting 10-10.5% in the coming quarters. This segment is projected to grow by 11-15% annually over the next two years, with accelerated growth anticipated as new capacities come online. This successful turnaround highlights Pricol's capability in integrating and optimizing acquired assets.

Strategic Growth Drivers and New Initiatives

Pricol's strategic vision extends beyond acquisitions, encompassing significant investments in new technologies and capacity expansions. The company is embarking on a substantial CAPEX cycle, with plans to invest INR 250-300 crores in both FY26 and FY27. This investment is crucial for creating capacities for new business opportunities, including a new technology license agreement for its switches business and expansion in the SPM and disc brake segments. The disc brake business, in particular, is poised for significant growth, driven by the mandatory implementation of ABS from January 2026, making disc brakes a necessity for all vehicles. Pricol has already secured large orders from top 5 OEMs, with production slated to begin in Q1 of the next fiscal year.

Furthermore, Pricol is strategically focusing on backward integration to enhance its self-reliance and achieve cost arbitrage. A notable initiative is the collaboration with BOE for optical bonding and screen manufacturing, critical components for touchscreen instrument clusters. This project, expected to be productionized within the next nine months, aims to reduce import dependence and strengthen the company's offerings, rather than directly generating revenue. The company is also developing smart e-cockpits and battery management systems, which are currently in customer testing phases and hold potential for future margin-accretive revenue.

Navigating Challenges and Future Outlook

Despite the strong performance, Pricol acknowledges certain industry headwinds. Management highlighted that Q3 is typically the weakest quarter for the automotive industry, and the company expects to align with this seasonal trend. Additionally, a significant semiconductor crisis, particularly impacting the auto sector due to supply issues from Nexperia, poses a challenge. While this may lead to 2-3 week revenue delays, Pricol has proactively identified alternate sources and validated parts, expressing confidence in meeting its internal targets, though exceeding them might be difficult. The increasing depreciation due to heavy CAPEX will also be a factor in the coming years.

Looking ahead, Pricol's management remains focused on sustained growth across its key verticals: Driver Information and Connected Vehicle Solutions (DICVS), Actuation, Control and Fluid Management System (ACFMS), and Precision Products (Polymer). The DICVS vertical is projected to reach INR 2,100-2,200 crores with a 12.5-13% margin, while ACFMS is expected to grow 30-35% annually to about INR 600 crores. The Polymer business is targeting a 9.5% steady-state margin with 11-15% annual growth. Pricol's proactive approach to innovation, strategic acquisitions, and capacity building positions it well to capitalize on evolving market demands and maintain its growth trajectory in the dynamic automotive components landscape.