diff --git a/docs/TOFS_pattern.rst b/docs/TOFS_pattern.rst
index 20233c8..4fea5dd 100644
--- a/docs/TOFS_pattern.rst
+++ b/docs/TOFS_pattern.rst
@@ -444,3 +444,75 @@ Resulting in:
 Note: This does *not* override the default value.
 Rather, the value from the pillar/config is prepended to the default.
 
+Using sub-directories for ``components``
+^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
+
+If your formula is composed of several components, you may prefer to provides files under sub-directories, like in the `systemd-formula <https://github.com/saltstack-formulas/systemd-formula>`_.
+
+.. code-block::
+
+   /srv/saltstack/systemd-formula/
+     systemd/
+       init.sls
+       libtofs.jinja
+       map.jinja
+       networkd/
+         init.sls
+         files/
+           default/
+             network/
+               99-default.link
+       resolved/
+         init.sls
+         files/
+           default/
+             resolved.conf
+       timesyncd/
+         init.sls
+         files/
+           Arch/
+             resolved.conf
+           Debian/
+             resolved.conf
+           default/
+             resolved.conf
+           Ubuntu/
+             resolved.conf
+
+For example, the following ``formula.component.config`` SLS:
+
+.. code-block:: sls
+
+   {%- from "formula/libtofs.jinja" import files_switch with context %}
+
+   formula configuration file:
+     file.managed:
+       - name: /etc/formula.conf
+       - user: root
+       - group: root
+       - mode: 644
+       - template: jinja
+       - source: {{ files_switch(['formula.conf'],
+                                 lookup='formula',
+                                 use_subpath=True
+                    )
+                 }}
+
+will be rendered on a ``Debian`` minion named ``salt-formula.ci.local`` as:
+
+.. code-block:: sls
+
+   formula configuration file:
+     file.managed:
+       - name: /etc/formula.conf
+       - user: root
+       - group: root
+       - mode: 644
+       - template: jinja
+       - source:
+         - salt://formula/component/files/salt-formula.ci.local/formula.conf
+         - salt://formula/component/files/Debian/formula.conf
+         - salt://formula/component/files/default/formula.conf
+         - salt://formula/files/salt-formula.ci.local/formula.conf
+         - salt://formula/files/Debian/formula.conf
+         - salt://formula/files/default/formula.conf
diff --git a/nginx/libtofs.jinja b/nginx/libtofs.jinja
index 9609be1..900e62b 100644
--- a/nginx/libtofs.jinja
+++ b/nginx/libtofs.jinja
@@ -2,7 +2,7 @@
                        lookup=None,
                        default_files_switch=['id', 'os_family'],
                        indent_width=6,
-                       v1_path_prefix='') %}
+                       use_subpath=False) %}
   {#-
     Returns a valid value for the "source" parameter of a "file.managed"
     state function. This makes easier the usage of the Template Override and
@@ -17,8 +17,8 @@
         use as selector switch of the directories under
         "<path_prefix>/files"
       * indent_witdh: indentation of the result value to conform to YAML
-      * v1_path_prefix: (deprecated) only used for injecting a path prefix into
-        the source, to support older TOFS configs
+      * use_subpath: defaults to `False` but if set, lookup the source file
+        recursively from the current state directory up to `tplroot`
 
     Example (based on a `tplroot` of `xxx`):
 
@@ -64,10 +64,15 @@
   {%- set src_files = src_files + source_files %}
   {#- Only add to [''] when supporting older TOFS implementations #}
   {%- set path_prefix_exts = [''] %}
-  {%- if v1_path_prefix != '' %}
-    {%- do path_prefix_exts.append(v1_path_prefix) %}
+  {%- if use_subpath and tplroot != tpldir %}
+    {#- Walk directory tree to find {{ files_dir }} #}
+    {%- set subpath_parts = tpldir.lstrip(tplroot).lstrip('/').split('/') %}
+    {%- for path in subpath_parts %}
+      {%- set subpath = subpath_parts[0:loop.index] | join('/') %}
+      {%- do path_prefix_exts.append('/' ~ subpath) %}
+    {%- endfor %}
   {%- endif %}
-  {%- for path_prefix_ext in path_prefix_exts %}
+  {%- for path_prefix_ext in path_prefix_exts|reverse %}
     {%- set path_prefix_inc_ext = path_prefix ~ path_prefix_ext %}
     {#- For older TOFS implementation, use `files_switch` from the config #}
     {#- Use the default, new method otherwise #}