What will the future look like?

Servotech Power System: India is experiencing rapid changes in electric vehicle (EV) charging infrastructure thanks to FAME-II’s incentive policy. The scheme actively supports the establishment of EV charging stations with the government allocating Rs 800 crore to help oil marketing companies develop this important infrastructure.

To achieve the ambitious goal of achieving 30% electrification of vehicles by 2030, approximately 46,397 charging stations will need to be built. Over the next 18 months, we expect to add approximately 7,000 new charging stations to meet this demand.

In the EV charging station construction space, there is a notable wave of small-cap stock creation: Sevotech Power Systems Limited. The company has achieved an incredible 3,900% return over three years, resulting in an incredible 40x share price valuation. Moreover, it has experienced an impressive surge of 321% over the past year.

Let us now examine the intricate details of Sevotech Power Systems Limited’s business model to gain insight into its success and the promising prospects the company holds in this trending sector.

Company Overview

Sevotech Power Systems Limited initially entered the industry by introducing sine wave inverters designed for domestic and commercial use. Since then, the company has expanded its product portfolio to include various 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.

In response to the demand for medical-grade equipment during the COVID-19 pandemic, Sevotech has become a major supplier of oxygen concentrators and UV-C disinfectant products, effectively addressing the severe demand-supply imbalance.

In 2022, the company strategically entered the electric vehicle (EV) market with the goal of building electric vehicle charging technology infrastructure throughout India. Expanding its presence, Sevotech later expanded its EV charger business to the Middle East and Africa. This diversification reflects the company’s adaptability and commitment to exploring new opportunities in emerging markets.

business division

sunlight

Servotech uses established technologies in solar panel installation, ensuring a balance of quality and cost-effectiveness. They specialize in Rooftop On-Grid, Off-Grid and Hybrid Solar solutions ranging from 100W to 10,000kW and are suitable for a variety of applications such as PCUs, panels, subports, EPCs and batteries.

EV charger

In the field of electric vehicle (EV) chargers, Servotech is a prominent manufacturer with a rich history in charging solutions, starting its business in the field of 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 a wide range of EVs, including two-wheelers, cars, buses and trucks. Notably, the electric vehicle charger has been approved by TATA and MG for their respective vehicles.

Power and Backup

Starting as a manufacturer of inverters, UPS, and servo stabilizers, Sevotech Power Systems has diversified its products to include residential and commercial inverters, UPS, and even tubular batteries, providing comprehensive power and backup solutions.

LED

In the LED segment, Servotech began producing energy-efficient lighting fixtures for residential, industrial and commercial use in 2011. The LED product line includes outdoor lighting such as bulbs, downlights, floodlights, panel lights, tube lights, bay lights, street lights and floodlights.

medical device

To address medical needs, Servotech has expanded its services to medical-grade devices, offering UVC lights and oxygen generators designed for respiratory diseases. Our subsidiary Rebreathe provides premium components essential to the development of these devices.

servo stabilizer

Known for their cost-effectiveness and reliability, Servotech’s servo stabilizers serve as electrical solutions that prevent the hazards associated with erratic voltage flow. These stabilizers combine economy and high performance to ensure optimal voltage levels for your devices.

finance

Source: Annual Report

In fiscal 2023, Servotech saw significant growth in its revenue, surging 85.8% to reach Rs 24.9 billion compared to Rs 134 million in fiscal 2022. After analyzing four years from FY2020 to FY2023, the company recorded a solid Compound Annual Growth Rate (CAGR) of 42.5%.

At the same time, net profit also increased significantly, increasing by 175% from ₹4 crore in FY2022 to ₹11 crore in FY2023. Over the four years from fiscal 2020 to fiscal 2023, cumulative net profit recorded an impressive CAGR of 122.4%.

In FY23, Servotech maintained favorable financial metrics with a solid return on equity (ROE) of 13.46% and return on equity (ROCE) of 18.33%. The company’s debt-to-equity ratio for the same fiscal year was 0.54.

What is the future?

Going forward, significant developments in the electric vehicle (EV) sector highlight the company’s promising prospects. In November 2023, Servotech secured a large order for 2,649 EV chargers from state-owned oil refiner Bharat Petroleum Corporation. The project’s EV charger range includes 3kW and 7kW.

Under the BPCL E-Drive project, Servotech will be responsible for manufacturing, supply and installation of 2,649 AC EV chargers strategically placed across the country, which will significantly contribute to the widespread adoption of EV charging solutions in major cities of India.

We have also made progress in international markets, including partnering with Al-Ansari Motors LLC in the UAE to provide EV charging stations in the Middle East and African markets. We also aim to revolutionize India’s EV charging infrastructure through our strategic partnership with EMCOR Power Solutions.

Servotech has signed a memorandum of understanding (MoU) with the Uttar Pradesh government to set up an EV charger manufacturing facility. Other important MoUs include collaboration with IIT Roorkee to develop advanced rectifier devices for CCS2 chargers and onboard EV chargers for 2, 3 and 4 wheelers.

Servotech applied for two patents in the EV charger technology area in December 2023, gaining a significant advantage over competitors. These patents enable fast charging of all GB/T Bharat DC 001 vehicles via CCS2 connector using a compact add-on device. The innovative methodologies introduced through these patents contribute to building a robust, interoperable and cost-effective EV charging ecosystem.

Servotech Power Systems’ ambitious plans and strategic initiatives suggest significant growth potential beyond its already impressive performance. The extent of this growth and its impact on the company’s valuation is still a topic of discussion and speculation. Share your thoughts in the comments below!

Written by Narin Surya

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