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Pricol logged a strong Q1, with consol revenue up 44% YoY (also aided by 3M of P3L consolidation vs 2M in Q4FY25) and EBITDAM rising by 60bps QoQ to 11% (ex-P3L, revenue growth stood at 11% with a sharp rise in EBITDAM to 12.3% vs 11.5% in Q4). Core-revenue outperformance against the underlying 2W industry production accelerated to 11% vs 2%/3% in Q4/Q3. Pricol targets continued outperformance vs the underlying industry, on premiumization-led content growth (eg digitization in clusters, new order wins) and new product launches/portfolio expansion (aided by strategic alliances/M&A). The mgmt guides to a healthy single digit margin at P3L, amid initiatives underway toward revenue/margin expansion at P3L as well as at its core operations. We continue to favor Pricol (refer to our note Targets 3x revenue by FY30; rare earth crunch to hit near term), on further improvement in its competitive positioning in a fast-premiumizing product category (clusters), apart from optionalities of expansion into more components backed by order wins (eg disc brakes launched in Q2; mass production for a strategic customer to start from Q4). Our estimates are unchanged; maintain BUY with TP of Rs575 at 24x Jun-27E PER.

Strong revenue and margin performance; underlying core margins on the rise

Consol revenue was up 44% (13.5% QoQ) at Rs8.,9bn with core-revenue (ex-P3L) up 11% YoY. Consol reported EBITDA grew 23% YoY (23% QoQ) to Rs990mn, with EBITDAM rising by 60bps QoQ to 11.1% led by 130bps/20bps reduction in staff costs/opex and partially offset by 80bps gross margin contraction. EBITDAM of the core-business (exP3L) also rose, by 75bps QoQ to 12.3%. Consol PAT stood at Rs499mn, up ~10% YoY.

Earnings Call KTAs 1) Pricol aims to continue outpacing the underlying end-user industry (core revenue outperformance vs 2W industry production at 11% in Q1 vs 3%/2% in Q3/Q4FY), aided by new product launches/premiumization-led content growth (value growth beats volume growth) despite ongoing ‘rare earth’ (REE)-related headwinds. 2) Q1FY26 was muted for the industry, largely due to REE shortages; the mgmt expects headwinds to persist in Q2 and anticipates a more stable production from Q3; Pricol implementing multiple measures for mitigating this issue. 3) Disc brakes launched in Q2, albeit in a limited manner; mass production for a major strategic 2W customer to begin from Jan-26; upcoming ABS regulations seen supporting growth here. 4) Pricol’s TLA with Italy-based Domino, for handlebar aggregates (switches, throttles, levers), was at the behest of certain customers; the mgmt expects revenue contribution to start in 12-15M; products for India and SE Asia. 5) P3L posted revenue of Rs2.05bn with ~7% EBITDAM in Q1FY26 (vs Rs1.7bn, 5% in Q1FY25); Pricol has initiated measures to support revenue/margin expansion, incl value-accretive products (engineered/precision plastic components), cost plans, and leveraging Pricol’s clientele. 6) Efforts underway to backward integrate/localize displays; progress expected over next 4 quarters; per the mgmt, complete de-risking from China is unfeasible. 7) Pricol plans capex of Rs5bn over next 3Y, of which Rs2.5- 3bn is at P3L; 20-22% incremental revenue can be generated from existing capacities.

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