Can be Pricol Ltd be a multibagger stock because of the new regulation of the Government which requires all public transport vehicles to fit location tracking devices?
Pricol Ltd can be big beneficiary of the new Govt Rule
The government has announced a rule according to which it is mandatory for all public transport vehicles with six seater capacity to have location tracking devices and emergency buttons.
The new rule, which will come into effect from 1st April 2018, covers all state transport buses and vehicles like school vans, ambulances etc.
The Government is also planning to introduce rules on speed control by requiring vehicles to install speed governors.
Pricol will be a big beneficiary of these regulations because it is already manufacturing these products and is supplying them to OEMs like Tata Motors, JCB and John Deere.
The new rule means that the Company will generate revenue of 1 Billion in the first year. This can triple in the next two or three years.
These business segments earn high operating margins of up to 21%.
Pricol has announced that its 2020 vision is to have a top line of Rs. 30 Billion. The present top line is about Rs. 13 Billion.
The business of fleet management and telematics is a minor part of Pricol ’s business and contributes about 15% to the top line. This is a scalable business and can contribute in a major way to the Company’ profitability.
The valuations at which the Company is quoting are not expensive. The present market cap is only Rs. 850 crore. This is below the book value after the reverse merger of Pricol Ltd with its subsidiary.
Pricol Ltd is already a multibagger
In the past 12 months, the Company has given a gain of nearly 100%.
Buy recommendation of Ashish Maheshwari of Blue Ocean
Ashish Maheshwari of Blue Ocean has recommended a buy of Pricol Ltd.
He said the company is a turnaround play where profits went up to Rs 43 crore from a Rs 18 crore loss last year. It is a global auto ancillary player with presence in almost 45 countries.
Pricol Ltd has a big catalogue of product variants in their segment and they cater to almost all segments be it two wheeler, four wheeler, tractor, commercial vehicles everything, Ashish Maheshwari said.
The Company sells to all original equipment manufacturers (OEMs) in the two-wheeler, four-wheeler and commercial vehicle segment.