Servotech Power Systems : India is undergoing a rapid transformation in its electric vehicle (EV) charging infrastructure, propelled by the incentivization policies of FAME-II.
Servotech Power Systems Delivers 3900% in 3yrs: What does the future look like?
Servotech Power Systems: India is undergoing a rapid transformation in its electric vehicle (EV) charging infrastructure, propelled by the incentivization policies of FAME-II.
This scheme actively supports the establishment of EV charging stations, with the government allocating Rs 800 crore to assist oil marketing companies in developing this crucial infrastructure.
The ambitious target of achieving 30% electrification of automobiles by 2030 necessitates the creation of approximately 46,397 charging stations. Over the next 18 months, expectations are set for the addition of around 7,000 new charging stations to meet this demand.
In the realm of EV charging station construction, there is a noteworthy small-cap stock-making wave – Sevotech Power Systems Limited. This company has delivered an astounding return of 3,900 percent over three years, making it a remarkable 40-bagger. Furthermore, it has experienced an impressive surge of 321% in just the past year.
Now, let’s delve into the intricate details of Sevotech Power Systems Limited’s business model to gain insights into its success and explore the promising prospects that the company holds in this trending sector.
Company Overview
Sevotech Power Systems Limited initially entered the industry by introducing Sine-Wave inverters designed for both domestic and commercial use. Subsequently, the company expanded its product portfolio to include a range of LED lighting solutions, Solar Street lights, Solar-Hybrid Inverters, and LED solar lighting solutions. In 2017, Sevotech went public and was listed on the National Stock Exchange.
Responding to the demand for medical-grade equipment during the COVID-19 pandemic, Sevotech became a primary supplier of Oxygen Concentrators and UV-C disinfectant products, effectively addressing the critical demand-supply imbalances.
In 2022, the company strategically entered the electric vehicle (EV) market, aiming to establish EV charging technology infrastructure across India. Expanding its footprint, Sevotech later extended its EV Charger business into the Middle East and Africa. This diversification reflects the company’s adaptability and commitment to exploring new opportunities in emerging markets.
Business Segments
Solar
Servotech employs established techniques for solar panel installation, ensuring a balance of quality and cost efficiency. They specialize in Rooftop On-Grid, Off-Grid, and Hybrid Solar Solutions ranging from 100 W to 10,000 kW, catering to diverse applications such as PCUs, Panels, Servport, EPCs, and batteries.
EV Charger
In the realm of Electric Vehicle (EV) Chargers, Servotech is a prominent manufacturer with a rich history in charging solutions, dating back to their work in inverters and UPS since 2001.
The company’s initial EV Charger phase includes products ranging from 3 kW to 360 kW, covering AC and DC fast chargers for various EVs, including two-wheelers, cars, buses, and trucks. Notably, their EV chargers are approved by TATA and MG for their respective vehicles.
Power and Backup
Originating as a manufacturer of Inverters, UPS, and servo stabilizers, Sevotech Power Systems has diversified its offerings to include domestic and commercial inverters and UPS, as well as tubular batteries, providing comprehensive power and backup solutions.
LEDs
In the LED sector, Servotech commenced production in 2011, crafting energy-efficient luminaries for residential, industrial, and commercial use. Their LED product line encompasses light bulbs, downlights, floodlights, panel lights, tube lights, bay lights, and outdoor lights, such as street and floodlights.
Medical-Grade Devices
Addressing medical needs, Servotech extends its services to medical-grade devices, offering UVC lights and oxygen concentrators designed for respiratory disorders. A subsidiary, Rebreathe, contributes premium components essential for developing such devices.
Servo Stabilizer.
Servotech’s servo stabilizers, renowned for their cost-effectiveness and reliability, serve as an electrical solution to prevent hazards associated with irregular voltage flows. These stabilizers ensure optimal voltage levels for appliances, combining affordability with high performance.
Financials
| FY2023 | FY2022 | FY2021 | FY2020 | |
| Revenue (in ₹crore) | 249 | 134 | 86 | 86 |
| Net Profit (in ₹crore) | 11 | 4 | 1 | 1 |
| ROE | 13.46% | 8.41% | 2.32% | 2.2% |
| ROCE | 18.33% | 14.04% | 6.95% | 9.06% |
Source: Annual Report
In the fiscal year 2023, Servotech saw a substantial increase in revenue, surging by 85.8% to reach ₹249 crore as opposed to ₹134 crore in FY2022. Analyzing four years, encompassing FY2020 to FY2023, the company displayed a robust Compound Annual Growth Rate (CAGR) of 42.5% in revenue.
Simultaneously, there was a noteworthy upturn in net profit, experiencing a 175% increase from ₹4 crore in FY2022 to ₹11 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased an impressive 122.4% CAGR.
In FY23, Servotech maintained favorable financial metrics with a solid Return on Equity (ROE) of 13.46% and a Return on Capital Employed (ROCE) of 18.33%. The company’s debt-to-equity ratio for the same financial year stood at 0.54.
What’s the Future?
Looking ahead, significant advancements in the Electric Vehicle (EV) segment highlight the company’s promising prospects. In November 2023, Servotech secured a substantial order for 2,649 EV chargers from Bharat Petroleum Corporation, a state-owned refiner. The range of EV chargers for this project includes 3kW and 7kW.
Under the BPCL E-drive Project, Servotech will be responsible for the manufacturing, supply, and installation of these 2,649 AC EV Chargers strategically positioned across the nation, contributing significantly to the widespread adoption of EV charging solutions in major Indian cities.
The company has also made strides in international markets, entering into partnerships with Al-Ansari Motors LLC in the UAE to provide EV Charging Stations in the Middle Eastern and African markets. Additionally, a strategic partnership with EMCOR Power Solutions aims to revolutionize EV charging infrastructure in India.
Servotech has signed a Memorandum of Understanding (MoU) with the Government of Uttar Pradesh to establish an EV Charger manufacturing facility in the state. Other important MoUs include collaborations with IIT Roorkee to develop advanced rectifier units for CCS2 chargers and Onboard EV chargers for 2, 3, and 4-wheelers.
In December 2023, Servotech filed two patents in the EV charger technology domain, providing a substantial advantage over competitors. These patents enable fast charging for any GB/T Bharat DC 001 vehicle via a CCS2 connector using a small additional device. The innovative methodologies introduced through these patents contribute to building a robust, interoperable, and cost-effective EV charging ecosystem.
The ambitious plans and strategic initiatives undertaken by Servotech Power Systems suggest a potential for significant growth beyond its already impressive performance. The extent of this growth and its impact on the company’s valuation remains a topic for discussion and speculation. Share your thoughts in the comments below!
