19-05-2025
Pricol Ltd (BOM:540293) Q4 2025 Earnings Call Highlights: Strategic Investments and Market ...
Release Date: May 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Pricol Ltd (BOM:540293) reported a consolidated revenue growth of 18.69% for FY25 compared to FY24.
The company achieved a return on capital employed of 22.86% in FY25, indicating efficient use of capital.
Pricol Ltd (BOM:540293) has made strategic investments in R&D to develop new products, which are expected to yield results in 8 to 12 quarters.
The acquisition of the plastics business from Syndrome A Components Limited is expected to enhance efficiency and increase margins.
The company is confident about a significant revival in the two-wheeler market due to regulatory changes, which should positively impact future revenues.
Q4 FY25 did not meet investor or management expectations due to a strong dollar impacting Forex earnings.
There was a significant increase in manpower costs as a result of strategic investments in R&D, affecting short-term profitability.
The two-wheeler sector, which accounts for 65% of the company's revenue, experienced muted numbers in Q4 due to regulatory changes.
Export revenues were negatively impacted by new tariffs imposed by the US administration, causing uncertainty among export customers.
The newly acquired plastics business reported lower earnings due to one-time acquisition costs and requires further investment to reach desired margins.
Warning! GuruFocus has detected 1 Warning Sign with BOM:538730.
Q: Can you provide insights into the increase in employee expenses and expectations for the future? A: The increase in employee expenses is primarily due to the addition of R&D staff for product and process development. This is a strategic investment to maintain our competitive edge. While the percentage of sales appears higher due to lower top-line revenue, we expect it to normalize to around 11.5% to 12% as sales increase. The current R&D investments will start yielding results in about 8 to 12 quarters. Vikram Mohan, Managing Director
Q: What impact have raw material price inflation and export mix had on margins? A: The impact on margins is due to raw material price inflation and a slowdown in exports, particularly to the US. However, exports are resuming, and we are firm on pricing despite tariff impacts. We expect normalcy to return in about two quarters. Vikram Mohan, Managing Director
Q: What are the capital requirements for the newly acquired Sundaram business? A: We plan to invest approximately INR 225 to 250 crores over the next four quarters to enhance efficiency, add capacity, and modernize operations. This investment will help improve margins and support top-line growth. Vikram Mohan, Managing Director
Q: Could you provide guidance on revenue growth considering new product developments? A: Our guidance of 13% to 15% growth remains unchanged, even without new products. The new products, expected to start production in FY28 and FY29, will contribute to future growth. Vikram Mohan, Managing Director
Q: What was the impact of the dollar movement on the bottom line? A: The forex impact was about INR 3.5 crores, which will be recovered in Q1 and Q2 of the current financial year. Priyadarshi Bastian, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
