💰 Financial Performance

Revenue Growth by Segment

Total Operating Income (TOI) grew 22.69% to INR 305.69 Cr in FY24 from INR 249.15 Cr in FY23, driven by deeper penetration in Solar and EV segments. Consolidated revenue for H1 FY26 stood at INR 244.82 Cr.

Profitability Margins

Net Profit ratio improved 53.93% to 5.68% in FY25 from 3.69% in FY24. Return on Equity (ROE) increased 75.46% to 18.95% in FY25 from 10.80% in FY24, while Return on Capital Employed (ROCE) grew 97.21% to 17.67% from 8.96% in FY24.

EBITDA Margin

EBITDA margin was 6.61% in FY24, a moderation of 55 bps from 7.16% in FY23 due to increased manufacturing, administration, and employee benefit expenses.

Capital Expenditure

The company is setting up a new unit to double its production capacity; specific INR Cr expenditure for this expansion was not disclosed.

Credit Rating & Borrowing

CRISIL Ratings assigned a 'Stable' outlook with bank limits of INR 47 Cr utilized at 64%. Infomerics Ratings assigned 'IVR BBB/Stable' for long-term facilities. Interest coverage ratio stood at 6.28x in FY24.

⚙️ Operational Drivers

Raw Materials

Raw materials include components for EV chargers, solar inverters, batteries, and solar panels, representing ~80% of total costs.

Capacity Expansion

Current capacity is being expanded to double existing output to support growth beyond the INR 500 Cr revenue mark.

Raw Material Costs

Raw material costs represent ~80% of total costs. EBITDA margins moderated by 55 bps in FY24 partly due to manufacturing expense increases.

Manufacturing Efficiency

Operating Profit Ratio improved 36% to 8.99% in FY25 from 6.61% in FY24, reflecting higher margins in sales.

Logistics & Distribution

Logistic delays are identified as a threat to the supply chain; specific distribution costs were not disclosed.

📈 Strategic Growth

Expected Growth Rate

40%

Growth Strategy

The company aims to leap from the INR 500 Cr revenue block to INR 2,500 Cr by expanding infrastructure, manpower alignment, and product shifting. Growth is supported by securing large government projects, such as the INR 73.70 Cr rooftop solar project from NREDCAP and the INR 16.31 Cr grid-connected solar project from Railway Energy Management Company Ltd.

Products & Services

EV chargers (AC/DC), solar inverters, batteries, solar panels, battery energy storage systems, Servo Stabilizers, and LED lighting solutions.

Brand Portfolio

Servotech

New Products/Services

Development of ultra-fast DC chargers and home AC chargers to capture the expanding EV infrastructure market.

Market Expansion

Expansion into grassroots levels for better profits and strategic alliances/joint ventures for new market entries.

Strategic Alliances

Strategic alliances and JVs are planned to expand market presence, though specific partner names were not disclosed.

🌍 External Factors

Industry Trends

The industry is seeing a thrust from the Government to increase EV and Solar penetration through incentives and subsidies, supporting Servotech's 22.69% revenue growth in FY24.

Competitive Landscape

Intense price-based competition from other players in the renewable energy and EV charging sectors.

Competitive Moat

Moat is built on the 21-year industry experience of promoters and established relationships with B2B customers and suppliers, enabling a 40% CAGR over the last three fiscals.

Macro Economic Sensitivity

Sensitive to economic and political conditions, changes in government regulations, and tax policies.

Consumer Behavior

Increasing demand from environmentally conscious customers and investors aligned with green initiatives.

Geopolitical Risks

Global supply chain disruptions and raw material shortages are identified as key threats.

⚖️ Regulatory & Governance

Industry Regulations

Regulatory changes could increase compliance costs and operational complexity; the company maintains an internal control system to satisfy legal and industry standards.

Environmental Compliance

The company stays aligned with green initiatives to attract environmentally conscious investors; specific ESG costs were not disclosed.

Taxation Policy Impact

Changes in tax policies are noted as a factor that could influence performance.

⚠️ Risk Analysis

Key Uncertainties

Rapid technological shifts and regulatory changes are primary uncertainties that could require significant capital or increase operational costs.

Third Party Dependencies

High dependency on raw material suppliers as they constitute ~80% of the cost structure.

Technology Obsolescence Risk

High risk of rapid technological shifts in the EV charging space requiring ongoing R&D and capital investment.

Credit & Counterparty Risk

Receivables from retail customers are typically received within 30-45 days; operations remain working capital intensive due to high debtors (96.05 days in FY25).