Most demergers we have covered in the Special Situations Alert AND in general follow a script: keep the steady, cash-generating business in the listed parent, and carve out the smaller, faster-growing “story” business into a new company so the market can finally see it.
In 2008, Bajaj Auto spun its financial-services business into Bajaj Finserv.
In 2022, Aarti Industries carved its pharma business out into Aarti Pharmalabs and Rossell India split its fast-growing aerospace-and-defence arm, Rossell Techsys, from its cyclical Assam tea business in 2024.
And just yesterday, Triveni Engineering declared the record date (22nd July 2026), bringing the demerger of its highly anticipated Power Transmission arm into Triveni Power Transmission ltd (TPTL).
In each case, the faster-growing piece got its own ticker AND more importantly its own multiple.
Pricol is running that exact script, but with a twist. The faster growing, higher margin business is also the larger one.
On 27 June 2026, Pricol’s board approved a scheme to demerge its Driver Information & Connected Vehicle Solutions (“DICVS”) business (instrument clusters, digital cockpits, telematics and battery-management electronics) into a new company called Pricol Autotech Limited. That business did ₹2,424.63 crore of revenue in FY26, or 61.17% of Pricol’s consolidated turnover.
What stays behind in the listed parent, Pricol Limited, is the mechanical half: the Actuation, Control & Fluid Management Systems (“ACFMS”) business (pumps, disc brakes, throttles, fuel-pump modules) and the recently acquired Precision Products (“P3L”) polymer business from TVS group in 2025.
Let’s walk through the mechanics of the proposed demerger and more importantly, whether there is value on the table.
WHY DEMERGERS CREATE VALUE
If you’re not familiar with demergers, here’s a small primer on WHY we’re looking at Pricol ltd from this lend.
When a company houses two businesses with genuinely different “DNA” under one roof, the market struggles to value it properly.
Fund managers who want exposure to a fast-growing automotive-electronics story don’t necessarily want a fluid-management and plastics manufacturer attached. The analyst who models pumps and injection-moulded panels doesn’t know how to price a display-and-software franchise. The result is a single, blended multiple that flatters neither business. This is the conglomerate discount.
A demerger forces the market to price each business independently. Separated entities attract sector-specific investors and analysts, management gets dedicated focus and its own capital-allocation framework, and each business pursues its own strategy without being dragged by the other’s cycle or capital intensity.
India’s recent demerger wave illustrates the mechanism well.
ITC demerged its hotels business in January 2025 (a division that consumed a large share of capital while contributing a small slice of profit), and ITC Hotels listed as an independent entity worth tens of thousands of crores, while ITC’s return ratios improved as a purer FMCG play.
Reliance carved out Jio Financial Services in 2023. Raymond’s stock re-rated through 2024-25 on the back of its lifestyle-versus-realty split. The Greenply-Greenpanel separation of 2019 remains the textbook case. Basically, give a focused business its own identity and its own investor base, and value tends to surface.
One caveat specific to Pricol, though, and worth stating up front: the classic demerger unlock is largest when the carved-out business is small in revenue but large in profit or scarcity value: a hidden 15%-of-revenue gem, for example. Pricol is not that. Here, both halves are material (roughly 60/40 by revenue), and the parent already trades a reasonable multiple. That changes the shape of the opportunity, as we’ll see in the Valuation section.
The unlock is real, but it is a re-rating-and-optionality story, not a mispriced-hidden-asset story.
SECTION 2: WHY PRICOL’S DEMERGER MAKES SENSE
2A. The two businesses have grown apart
Pricol today is really two companies wearing one badge.
Pricol ltd – Key Product Verticals
On one side sits DICVS, the electronics business. Pricol is the second-largest instrument-cluster maker in the world by volume, behind only Japan’s Nippon Seiki, and holds a 55-60% share of the domestic instrument-cluster market and roughly 65% in two-wheelers.
This is an innovation-led, premiumisation business where industry is shifting from mechanical dials to LCD, TFT and hybrid digital clusters, then on to integrated e-cockpits, heads-up displays and connected telematics.
Content-per-vehicle rises with every upgrade. Its edge here is software, hardware and electronics engineering, and it spends ~4.5% of revenue on R&D.
On the other side sits ACFMS-plus-P3L, the manufacturing business.
This is a scale-led platform: fluid pumps, coolant and oil pumps, disc brakes, cabin-tilt systems, and injection-moulded polymer components. Its edge is manufacturing capability, process excellence and cost competitiveness, not electronics IP. Its megatrends are vehicle-production growth, lightweighting, localisation and export share, not displays and software.
Different customers’ needs, different competitive dynamics, different capital-allocation logic (talent and global R&D for one; capacity and automation for the other), different risk profiles (technology-disruption risk for one; commodity and cyclicality risk for the other).
Management’s own framing is that the two have “acquired sufficient scale and maturity to function more effectively as focused standalone businesses.”
2B. Zooming in on DICVS: the business that’s moving out
The carve-out, Pricol Autotech, is the crown of the group and the reason this demerger is interesting.
Start with the moat. A ~55-60% domestic share in Instrument clusters, five decades of OEM relationships, and the world’s #2 volume position – are not easily dislodged. On the Q4 FY26 call, when an analyst flagged new competition entering clusters (including a group company of the largest domestic OEM), CMD Vikram Mohan pointed to confirmed letters of intent across most programmes and said he sees no dip in market share over the next three years, “barring degrowth or slowing down of the market.”
Then the growth vectors, most of which are still in early stages:
- Passenger vehicles. Pricol’s old non-compete with erstwhile JV partner Denso has expired, opening the PV cluster market that was previously off-limits. It is already starting to win big: roughly 75-80% of Tata Motors’ cars now ship with Pricol clusters, and the new Sierra programme won Pricol a development award from Tata. [Source: CRISIL rationale; Q4 FY26 concall]
- New electronic products. Battery-management systems are in final validation with a large two-wheeler OEM, with start-of-production expected within four-to-five quarters. Integrated telematics (Pricol is already the largest telematics supplier to off-road vehicles, e.g. JCB) and e-cockpit for PVs are in the pipeline. [Source: Q3 FY26 concall]
- Backward integration. An exclusive MOU with BOE (the world’s largest display maker) to localise LCD/TFT backlight modules in India. This won’t add revenue directly; it strengthens and de-risks the product offering against a raw-material base that is 45-50% imported (largely from China). [Source: Q3 & Q4 FY26 concalls; CRISIL rationale]
All said and done, DICVS is still ~70% dependent on two-wheeler OEMs, ~90% domestic, and carries meaningful forex risk because so much of its screen content is imported.
It is a high-quality electronics-hardware franchise, but it is a hardware franchise, maybe “software defined” as management puts it but certainly NOT a software company. Plus, it’s cyclical. Keep that in mind before reaching for a software multiple in the valuation section.
What stays behind is not the runt, either. The remaining Pricol has its own re-rating levers:
ACFMS grew ~30% in FY26 with a real export book (Caterpillar and other US/EU customers in mass production). Disc brakes start production for a large two-wheeler OEM from Q1 FY27 into a likely tailwind of mandatory braking-system regulation and P3L, the injection-moulding business acquired from Sundaram Auto Components (a TVS entity) in January 2025, did ₹924 crore in FY26, which the management is targeting to double it within three years, while building a polymer “centre of excellence” to move up the value chain.
It is also the vehicle for further M&A, with the promoter openly evaluating acquisitions. [Source: Q3 & Q4 FY26 concalls]
THE MECHANICS: HOW THE DEMERGER WILL WORK
The structure here is refreshingly clean, with none of the shareholding-compression fine print that some recent demergers carried.
The ratio. For every 1 share of Pricol Limited you hold on the record date, you receive 1 share of Pricol Autotech Limited (face value ₹1). No cash changes hands. [Source: Scheme, Annexure A & B]
Mirror shareholding. Pricol Autotech’s shareholding will exactly mirror Pricol’s: promoters ~38.51%, public ~61.49% in both entities. Pricol Autotech is currently a 100%-owned subsidiary; on the effective date, that 100% holding is cancelled and shares are issued directly to Pricol’s shareholders instead. So there is no dilution, no compression of public holding, and no residual parent stake to attract a holding-company discount. You simply end up owning two listed companies instead of one. [Source: Scheme, Annexure A]
Both will be listed. Pricol Autotech is to be listed on the NSE and BSE. [Source: Scheme, Annexure A]
Same promoter, same driver. Vikram Mohan (who took over as Chairman & MD after Vanita Mohan stepped back to chair the promoter holding entity) runs both. This is a focus exercise, not a control change. [Source: Q4 FY26 concall]
Where we are, and why patience is required. This is the single most important practical point. As of this writing (July 2026), only the board has approved the scheme. Still ahead: NOC from the stock exchanges, filing with the NCLT (Chennai bench), NCLT-directed shareholder and creditor meetings, NCLT sanction, and finally listing. CRISIL, which placed Pricol’s rating on “Watch Developing” on 7 July 2026, expects the process to take 15-18 months, with an effective date of 1 April 2027. [Source: CRISIL rationale] In plain terms, the actual listing of Pricol Autotech is plausibly a late-2027 / 2028 event. There is no record-date trade to catch here yet. This is a wait-and-watch situation.
The near-term backdrop is choppy, too. Management spent much of the Q4 FY26 call flagging headwinds (a falling rupee, polymer up ~55%, aluminium up ~62%, semiconductors up ~35%, spiralling freight) and explicitly guided to “softening of earnings” in the near term, even while refusing to cut long-term capex. Costs are recovered from OEMs with a three-to-six-month lag and never fully.
So the operating momentum going into the demerger process may look soft before it looks strong. [Source: Q4 FY26 concall]
THE VALUATION MATH. IS THERE VALUE?
| Business | FY26 revenue | Est. EBITDA margin | Est. EBITDA |
| DICVS (→ Pricol Autotech) | ₹2,425 cr | ~14% (premium mix, estimated) | ~₹340 cr |
| ACFMS (stays) | ~₹615cr | ~11-12%, exports-led (estimated) | ~₹75 cr |
| P3L / polymer (stays) | ₹924 cr | 9.24% (disclosed) | ~₹85 cr |
| Consolidated | ~₹3,963 cr | 12.44% (reported) | ₹493 cr |
The starting point. Pricol today trades around ₹627 per share, a market capitalization of roughly ₹7,645 crore. Net debt is modest ₹240 crore, which puts enterprise value (market cap + net debt) at roughly ₹7,885 crore and the stock at about 16x FY26 EBITDA of ₹493 crore.
That is not, against the auto-ancillary peer set, an expensive multiple: quality peers trade at 17-37x EV/EBITDA (table below). But the market applies that single blended multiple to both halves at once, the premium electronics franchise and the lower-margin manufacturing business alike.
The FY26 building blocks
In FY26, Consolidated revenue from operations was ~₹3,963 crore, EBITDA ₹492.91 crore at 12.44% and PAT was ₹250.80 crore. The segment-wise breakdown is as follows:
| Business | FY26 revenue | Est. EBITDA margin | Est. EBITDA |
| DICVS (→ Pricol Autotech) | ₹2,425 cr | ~14% (premium mix, estimated) | ~₹340 cr |
| ACFMS (stays) | ~₹615cr | ~11-12%, exports-led (estimated) | ~₹75 cr |
| P3L / polymer (stays) | ₹924 cr | 9.24% (disclosed) | ~₹85 cr |
| Consolidated | ~₹3,963 cr | 12.44% (reported) | ₹493 cr |
Peer benchmarking :
Pricol has no listed pure-play instrument-cluster peer, so each half is best benchmarked against the broader auto-electronics and precision-manufacturing cohorts.
Peer Comparison Table
| Company | Business | Proxies for | Mkt cap (₹ cr) | EV/EBITDA (x) |
| Uno Minda | Switches, sensors, lighting, electronics | Autotech / DICVS | ~66,000 | ~37 |
| SJS Enterprises | Decorative aesthetics, cover-glass / display | Autotech / premiumisation | ~7,200 | ~24 |
| Minda Corporation | Wiring harnesses, connectors, mechatronics | Autotech / DICVS | ~16,700 | ~20 |
| Endurance Technologies | Brakes, suspension, aluminium die-casting | RemainCo / ACFMS | ~36,000 | ~21 |
| Suprajit Engineering | Control cables, actuation | RemainCo / ACFMS | ~6,980 | ~17 |
| Pricol (blended, today) | Clusters + ACFMS + polymer | the current whole | ~7,645 | ~16 |
The read-across is the interesting part: at ~16x EV/EBITDA, Pricol trades below every peer in the set.
The electronics and premiumisation names carry the richest multiples (Uno Minda ~37x, SJS ~24x, Minda Corp ~20x) while the actuation and precision names sit much lower at ~17-21x.
Pricol’s single blended ~16x sits under both groups, which is precisely the gap a demerger is meant to close by letting each half be marked against its own comparable.
Sum-of-the-Parts Valuation
Pricol Autotech (DICVS): On ₹2,425 crore of revenue at an estimated ~14% EBITDA margin (above the group’s 12.44%, reflecting the richer cluster mix), EBITDA is roughly ₹335 crore. As a focused, world-#2 cluster pure-play riding premiumisation and PV entry, an 18-25x EV/EBITDA is defensible on a relative basis.
Remaining Pricol (ACFMS + P3L): On ~₹1,540 crore of revenue at an estimated ~10% blended EBITDA margin, EBITDA is roughly ₹160 crore (P3L ~₹85 crore at its disclosed 9.24%, ACFMS ~₹75 crore). As a fast-growing but lower-margin precision and polymer platform (with disc-brake and export optionality), a 10-16x EV/EBITDA range seems fair: a clear discount to precision peers like Suprajit (~17x) and Endurance (~21x) at the low end, given P3L’s ~9% margins and the polymer-heavy mix, narrowing to roughly Suprajit’s level at the top.
Basis these EBITDA numbers and multiples ranges vs peers, here’s what we get:
Sum-of-the-Parts Valuation Table
| Line item | Bear | Base | Bull |
| Pricol Autotech (DICVS) EBITDA (₹ cr) | 340 | 340 | 340 |
| EV/EBITDA (x) | 18 | 21 | 25 |
| Implied EV (₹ cr) | 6,180 | 7,140 | 8,500 |
| Remaining Pricol (ACFMS + P3L) EBITDA (₹ cr) | 160 | 160 | 160 |
| EV/EBITDA (x) | 10 | 13 | 16 |
| Implied EV (₹ cr) | 1,600 | 2,080 | 2,560 |
| Total enterprise value (₹ cr) | 7,780 | 9,240 | 11,060 |
| Less: net debt (₹ cr) | (240) | (240) | (240) |
| Implied equity value (₹ cr) | 7,540 | 9000 | 10,820 |
| vs current market cap of ~₹7,645 cr | (1.4%) | +17% | +41.5% |
So even on trailing FY26 EBITDA, the bear case lands roughly at the current price and the bull case sits ~40% above it. The base case, at multiples that still leave both halves cheaper than their listed comparables, is ~16% upside.
In the bear case, the parts are roughly in line with the current price. The upside only appears if DICVS re-rates toward premium auto-electronics multiples as a focused listed pure-play. This is not a day-one arbitrage or a screaming mispricing. It is a bet that separation, dedicated coverage and a cleaner equity story let the electronics business command the multiple its franchise arguably deserves, while the manufacturing business is valued for what it is, rather than diluting the whole.
Upside vs Downside risks behind our assumptions
The SOTP uses trailing FY26 numbers. It ignores the BMS ramp, PV cluster wins at Tata (and a possible Mahindra entry), the disc-brake SOP, P3L doubling, and any bolt-on M&A, all of which could lift both entities’ EBITDA over the next two-to-three years, which is exactly the window in which the demerger completes.
Against that, FY27 earnings may soften on the macro headwinds management flagged, and the electronics business carries genuine 2W-concentration and forex risk. The asymmetry is favourable but the real prize is the multiple expansion, and multiples are earned over time as a standalone track record builds, the way Triveni Turbine’s re-rating out of a sugar company took years, not a quarter.
Note: We have relied on Pricol’s own primary disclosures (the 27 June 2026 Scheme of Arrangement board-intimation package, the FY25 Annual Report, and the Q3 & Q4 FY26 investor presentations and earnings-call transcripts), the CRISIL Ratings rationale dated 7 July 2026, and market data from http://www.screener.in and http://www.tijorifinance.com. Only where data was unavailable have we used an alternate, widely accepted source.
Disclaimer:
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Rahul Rao has been Investing since 2014. He has helped conduct financial literacy programs for over 1,50,000 investors. He helped start a family office for a 50-year-old conglomerate and worked at an AIF, focusing on small and mid-cap opportunities. He evaluates stocks using an evidence-based, first-principles approach as opposed to comforting narratives.
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