There is a famous saying that "when there is gold rush people selling shovels make money". Why am I telling this now? We all are aware that there is an EV revolution in India. So the major part of electric vehicles [EVs] is the battery. So EV revolution is directly linked to battery production and sales.
But in this blog I'm talking about the charging facility for the batteries to function. So without a charger how can EV run ?
Now you might have rightly guessed, I'm speaking about Servotech Power Systems ltd. This is an NSE listed company. They have been in the electronics industry from 2004. So around 20 years they have been serving. Let us look at the company deeper.
This blog is only to share my view points and kindly do not consider this as buy or sell advise.Do your own research before investing in any stocks.
Main Business:
This company is one the leaders in producing and selling EV chargers presently in India. They also provide solar products, ultra-fast DC chargers and home chargers. These are just from their 'EV mobility' segment. Other than this their other products are LEDs, tubular batteries, solar inverter, solar batteries, servoport, SMU, oil cooled stabilizers, oxygen concentraters and UV-C disinfection lamp.
They have some exclusively patented products.
Fundamentals:
The company is basically a small cap, having a market cap of Rs. 1766 crores.
- ROCE : 17.7%
- ROE :16.8%
- Debt-to-equity :0.54
- Stock P/E :127
- Industry P/E: 40
Company has a decent sales growth over the years. The compounded profit growth in the last 3 years alone was 130% and the sales growth during the same period was 43%.
[All these data were taken from Screener website on 25-March-2024. Some of these ratios or values might have changed later.]
Order book & projects:
- BPCL EV charger Green Corridor Project- 600 EV chargers
- Shivalik Microgrid Solar Power Station
- Haldia 500kWp Solar PV
- BPCL 500kv Solar PV project
- IOCL -24x7 solar-powered fuel station driven by Servotech
- MoU with U.P. Government to establish EV Charger manufacturing facility
- Pact signed with National Solar Energy Federation of India to establish Solar powered EV charger enabled carport
[All these data were taken from Screener website]
The company had also expanded its operations to Middle-East and Africa.
Conclusion:
The company has a bright future. The value of the order book is alone at least twice its market cap. Now we are just at the starting stage of EV revolution. So when the EV segment booms all these types of companies would also start to boom. As we saw above, this company is one the leaders in the segment [EV segment]. So all the improvement in the industry would directly improve the position of the company even better. Presently this company is fundamentally strong. According to me even now the stock is at correct valuation only, even though its P/E and P/BV are too high. Even I hold stocks in this company.
But I do not have any intention to recommend the readers to buy this company's shares. I request the readers to do their own research before buying any stocks.
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