Servotech Power Systems is a leading manufacturer of solar inverters, solar panels, and EV chargers in India. The company is listed on the National Stock Exchange of India (NSE). Servotech has a strong presence across 21+ Indian states and has installed over 2400 EV chargers in collaboration with renowned oil marketing companies. The company is committed to the “Make in India” initiative and manufactures its products in India.
Table of Contents
Importance of Share Price Monitoring
For investors, closely tracking Servotech’s share price trends and dynamics is crucial to ascertain the company’s financial health, growth prospects, and role in the Indian power electronics sector. Share price analysis provides insights into market sentiment towards Servotech and guides informed investment decisions. Continuous monitoring is key for investors to benefit from potential growth in Servotech’s share price.
Servotech Power Systems Company Overview
Historical Evolution
Early Years (2004-2010):
- Founded in 2004, Servotech began by manufacturing and selling inverters, UPS systems, and servo stabilizers under the SERVOTECH brand.
- Established a factory in a tax-free zone in Himachal Pradesh and opened branch offices in Uttar Pradesh and Delhi.
- Developed high-capacity backup solutions for retail chains and the banking sector.
- Registered and certified with various government agencies to participate in public sector projects.
Expansion and Growth (2010-2017):
- Opened new branch offices in Jammu and Kolkata.
- Secured major orders from government agencies, supplying and installing thousands of UPS and inverter units.
- Launched LED lights manufacturing in Delhi and expanded into solar products like PCUs, street lights, and LED lights.
- Crossed a turnover of Rs. 50 crore in 2016.
- Converted into a public limited company in 2017.
Recent Developments (2018-Present):
- Achieved significant revenue growth, with a reported 86.35% increase in the past 3 years.
- Secured orders from major players like BPCL and filed patents for innovative EV charger technology.
- Expanded product portfolio to include EV chargers and energy management solutions.
- High promoter holding of 60.60% indicates strong control and vision.
Financial Indicators
| Metric | Value |
|---|---|
| Market Cap (Cr.) | 2004.20 |
| P/E Ratio | 143.72 |
| ROA (%) | 8.81 |
| Current Ratio | 1.79 |
| ROE (%) | 16.77 |
| Debt/Equity Ratio | 0.53 |
| Inventory Turnover Ratio | 18.62 |
| Sales Growth (%) | 86.35 |
| Operating Margin (%) | 7.15 |
| Dividend Yield (%) | 0.23 |
Recent Performance:
- Down 4.99% today
- Up 17% year-to-date
- CAGR of 343.5% over the past 5 years
Strengths:
- High Sales Growth: 86.35% in the past year
- Good Profit Growth: 187.96% in the past year
- High Promoter Holding: 60.6%
- Efficient Cash Conversion Cycle: 73.72 days
- Low Debt to Equity Ratio: 0.53
Weaknesses:
- Negative Cash Flow from Operations: -₹26.81 Cr. in the past year
- High Valuation: P/E Ratio of 151.27
- Low Return on Assets: 8.81%
- Low Dividend Yield: 0.23%
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Servotech Share historical movement
- Overall trend: The share price of Servotech Power Systems has been in a downtrend for the past few years. The company’s share price has fallen from a high of ₹141.30 in January 2022 to ₹92.40 on February 8, 2024. This is a decrease of approximately 34%.
- Recent performance: In the past month, the share price of Servotech Power Systems has fallen by approximately 4.99%
Recent Developments
- January 2024: Signed a Memorandum of Understanding (MoU) with the Government of Uttar Pradesh to establish an EV charger manufacturing plant in the state. This move aims to further strengthen Servotech’s position in the EV charging market.
- January 2024: Entered into a strategic partnership with Bharat Petroleum Corporation Limited (BPCL) to install 1,800 fast EV charging stations across India. This massive project, valued at Rs 120 crore, signifies a significant contribution to the development of EV infrastructure in the country.
Product Development and Innovation:
- January 2024: Announced the establishment of a new subsidiary, Techbec Green Energy Pvt. Ltd., focusing on the manufacturing of key EV charger components and lithium-ion batteries. This move aims to achieve greater vertical integration and enhance cost-efficiency.
- December 2023: Introduced a new range of interoperable chargers compatible with CCS2, the fast-charging standard adopted by most European and American EVs. This eliminates the need for dual infrastructure, offering greater flexibility and convenience to users.
Financial Performance:
- January 2024: Released financial results for FY22, showcasing a remarkable 64% increase in revenue compared to FY21. Profits grew by 386%, with a 41% growth in EBITDA . This highlights the company’s strong financial performance and growth trajectory
Partnerships and projects:
- BPCL EV Charger Order: Secured a Rs 120 crore order from Bharat Petroleum Corporation Limited (BPCL) to install 1,800 fast EV charging stations across India. This is a significant development for Servotech, expanding their reach and presence in the EV charging infrastructure market.
- MoU with UP Government: Signed a Memorandum of Understanding (MoU) with the Government of Uttar Pradesh to establish an EV charger manufacturing plant in the state.
Role in the Power Electronics Sector
Core Business Model
Servotech Power Systems Limited (Servotech) is a manufacturer of inverters, power supplies, and solar products. They operate in India and internationally, with a focus on Southeast Asia, Africa, Europe, and the Middle East. The company has experienced significant growth in recent years, with revenue up 86.35% year-over-year
Technological Innovations
Servotech has pioneered several innovations in India like smart servo drives, regenerative UPS systems, and grid-interactive inverters. It is also developing analytics solutions for predictive maintenance of power electronics assets. The company has received multiple patents for its technology. Such innovations have cemented Servotech’s reputation as a technology leader in Indian power electronics industry.
Servotech Power Systems Share Price Analysis
Current Share Price Dynamics
Current Price: ₹92.40, down 4.99% today
Recent Performance:
- The stock has been volatile in recent weeks, with a high of ₹96 and a low of ₹92.40 in the past week.
- Year-to-date, the stock is up 81.68%.
- Over the past year, the stock has gained 5192.93%.
Technical Analysis
Overall:
- Upward trend: The stock is in an upward trend, having made a new 52-week high recently and gaining significantly from its 52-week low.
- Technically moderately strong: The Trendlyne Momentum Score is 64.2, indicating moderate technical strength.
- Overbought: RSI and MFI suggest the stock is overbought, potentially indicating a pullback in the near future.
Key Indicators:
- RSI: 65.7 (overbought)
- MFI: 91.7 (strongly overbought)
- MACD: Bullish
- ADX: 27.5 (indicates strong trend)
- Beta: 0.3 (low volatility)
- Delivery Volume: 100% of traded volume on NSE and BSE (strong buying interest)
Moving Averages:
- Trading above: 7 out of 8 SMAs, indicating bullish momentum.
Oscillators:
- Trading above: 5 out of 9 oscillators in bullish zone.
Support and Resistance:
- Current price: ₹92.4
- Pivot point: ₹97.25
- Resistance: R1 ₹97.25, R2 ₹97.25, R3 ₹97.25
- Support: S1 ₹97.25, S2 ₹97.25, S3 ₹97.25
Shareholding Structure of Servotech Power Systems
| Investor Type | Percentage |
|---|---|
| Promoters | 60.60 |
| Domestic institutional investors | 0.00 |
| Foreign Institutional Investors | 7.28 |
| Public & Other | 25.59 |
| Corporate Holding | 6.53 |
In-Depth Analysis of Recent Annual Results
Recent Annual Results (FY2023):
- Revenue: ₹249.15 Cr (up 86.35%)
- Profit After Tax (PAT): ₹10.92 Cr (up 187.96%)
- Earnings per Share (EPS): ₹0.50 (up 150%)
- Debt-to-Equity Ratio: 0.53
- Return on Equity (ROE): 16.77%
- Return on Assets (ROA): 8.81%
Recent Financial Performance:
- Revenue: ₹249.15 Cr (up 86.35% YoY)
- Profit After Tax (PAT): ₹10.09 Cr (up 187.96% YoY)
- Earnings per Share (EPS): ₹0.48 (up 150%)
- Return on Equity (ROE): 16.77%
- Return on Assets (ROA): 8.81%
- Debt-to-Equity Ratio: 0.53
- Current Ratio: 1.79
- Sales: ₹249.15 Cr. (TTM)
- Profit after tax: ₹10.92 Cr. (TTM)
- EPS: ₹0.50 (TTM)
- Debt-to-equity ratio: 0.53
Servotech Power Systems Share Price Targets (2023-2030)
| Year | 1st Target | 2nd Target |
|---|---|---|
| 2024 | ₹106 | ₹138 |
| 2025 | ₹143 | ₹176 |
| 2026 | ₹183 | ₹200 |
| 2027 | ₹222 | ₹232 |
| 2028 | ₹254 | ₹288 |
| 2029 | ₹284 | ₹330 |
| 2030 | ₹346 | ₹414 |
Key factors influencing the target price:
- Positive factors:
- Strong growth in the EV market, a key focus area for Servotech.
- Recent order wins from major players like BPCL.
- High promoter holding, indicating long-term commitment.
- Good financial performance with increasing sales and profits.
- Negative factors:
- High valuation compared to some peers.
- Dependence on government policies and regulations for EV adoption.
- Volatile market conditions and competition from established players
Servotech Share Price Target for 2024
For 2024, Servotech’s share price target is estimated to be in the range of Rs 106-138. The company’s revenues are projected to grow by 35-40% in 2024 on the back of rising exports and new product introductions. Operating margins are also expected to improve to 18-19% due to benefits of operating leverage. Considering revenue and margin growth, the EPS is forecasted to be Rs 8.5-9.5 in 2024. Given Servotech’s high growth potential, a P/E multiple of 22-24x is likely to be assigned by the market. Based on these factors, the share price valuation comes to Rs 106-138 by 2024.
Servotech Share Price Target for 2025
By 2025, Servotech’s share price is likely to reach Rs 143-176 based on revenue growth and margin expansion drivers. The company’s revenue growth could accelerate to 45-50% by 2025 as it gains market share in the fast-growing solar and electric vehicle segments. Operating margins are estimated to grow to 20-22% by 2025 on the back of economies of scale. Accordingly, 2025 EPS is forecasted at Rs 13-14. Assigning a higher P/E multiple of 25-28x on 2025 earnings given strong growth visibility.
Servotech Share Price Target for 2026
For 2026, the share price target for Servotech is estimated at Rs 183-200 based on continued growth momentum. The company’s exports business is projected to drive 40-45% revenue growth in 2026. Margin expansion to 22-24% is likely owing to high-margin product launches planned. With EPS growth to Rs 18-20, and P/E multiple of 30-32x, Servotech’s share price could reach Rs 183-200 by 2026.
Servotech Share Price Target for 2027
By 2027, Servotech’s share price target is forecasted to be Rs 222-232 based on Make in India policies, distribution expansion, and sustained growth. Revenue is projected to grow at 35-40% by 2027, while EBITDA margin is estimated at 22-24% levels. EPS is likely to be Rs 26-28. Considering a P/E multiple of 32-35x, the share price valuation comes to Rs 222-232 by 2027.
Servotech Share Price Target for 2028
For 2028, Servotech’s share price target is estimated at Rs 254-288 owing to its market leadership and high entry barriers. Revenue growth of 30-35% is likely in 2028 along with EBITDA margin sustenance at 24-26%. EPS is forecasted to grow to Rs 36-40. Applying a higher P/E multiple of 38-42x considering market dominance, the share price is projected to reach Rs 1,368-1,680 by 2028.
Servotech Share Price Target for 2029
By 2029, Servotech’s share price target is expected to be Rs 284-330 owing to its leadership in EV charging solutions and high-margin services segment. Revenue growth could moderate but remain healthy at 25-30% by 2029. EBITDA margins may sustain around 25-27% levels, while EPS could reach Rs 48-52. With a premium P/E multiple of 40-45x, the share price valuation is estimated at Rs 284-330 by 2029.
Servotech Share Price Target for 2030
For 2030, Servotech’s share price target is forecasted to reach Rs 346-414 based on its global expansion, dividend payouts, and steady growth. Revenue is estimated to grow at 20-25% by 2030, with EBITDA margins around 26-28%. EPS is likely to reach Rs 64-68 by 2030. Considering P/E multiple of 44-48x, the share price target for 2030 comes to Rs 346-414
Comparative Analysis with Competitors
| Company | Price | P/E Ratio | ROE | ROCE | Sales Growth (3Y) | Profit Growth (3Y) |
|---|---|---|---|---|---|---|
| Shilchar Tech | 3,985 | 16.47 | 42.86% | 53.85% | 21.40% | 187.96% |
| Spectrum Electrical | 1,850 | 30.39 | 9.60% | 11.35% | 13.10% | 52.70% |
| Honda India Power | 2,360.90 | 3.12 | 12.10% | 16.50% | 13.50% | 13.20% |
| Rishabh Instruments | 607.70 | 66.5 | 8.73% | 10.72% | 14.30% | 11.20% |
| HPL Electric | 326.95 | 2.62 | 3.59% | 8.56% | 10.70% | 9.90% |
SWOT analysis for servotech
Strengths:
- High Revenue Growth: The company boasts impressive revenue growth of 86.35% for the past 3 years, indicating good market traction and expansion potential.
- High Promoter Holding: With a promoter holding of 60.60%, there’s strong control and alignment of interests between the company and its management.
- Efficient Inventory Management: The inventory turnover ratio of 18.62 suggests efficient management of inventory and working capital.
- Decent ROE: The ROE of 16.77% indicates good profitability on shareholders’ equity.
- Low Debt: The debt-to-equity ratio of 0.53 signifies a healthy capital structure with low reliance on debt.
Weaknesses:
- Negative Cash Flow: The company has a negative operating cash flow of -26.81, indicating difficulty generating cash from its operations.
- High Valuation: The P/E ratio of 143.72 suggests the stock might be overvalued compared to its earnings.
- Low Operating Margin: The operating margin of 7.15% is relatively low, indicating that a large portion of sales revenue goes towards operational expenses.
- Low Dividend Yield: The dividend yield of 0.24% is low compared to other companies in the sector.
Opportunities:
- Growing EV Market: The company’s presence in the EV charging infrastructure segment positions it to capitalize on the rapidly growing electric vehicle market.
- Expansion into New Markets: Servotech has the potential to expand its geographical reach and tap into new markets in south-east Asia, Africa, and the Middle East.
- Product Diversification: Expanding its product portfolio beyond inverters and stabilizers could offer additional revenue streams and mitigate risk.
Threats:
- Intense Competition: The company faces stiff competition from established players in the industry, both domestic and international.
- Fluctuations in Raw Material Prices: Dependence on volatile raw material prices could impact profitability.
- Rising Interest Rates: Increasing interest rates could make debt financing more expensive and impact expansion plans
Future Outlook for Servotech Power Systems Share
Expert Opinions and Market Sentiment
- Positive:
- The company has shown a good profit growth of 135.08% for the Past 3 years.
- The company has shown a good revenue growth of 41.77% for the Past 3 years.
- The company has an efficient Cash Conversion Cycle of 73.72 days.
- The company has a high promoter holding of 60.60%.
- Negative:
- Company has negative cash flow from operations of -26.81.
- The company is trading at a high EV/EBITDA of 87.11.
Overall, the expert opinions on Servotech Power Sys are mixed. Some analysts believe that the company is a good investment due to its strong growth prospects, while others are concerned about its negative cash flow and high valuation
Growth Drivers and Challenges
Growth Drivers:
- Rising Demand for EVs and EV Charging Infrastructure: The Indian government’s push for electric vehicles (EVs) is creating a significant demand for EV charging infrastructure. Servotech is well-positioned to capitalize on this opportunity with its EV charger technology and solutions.
- Expanding Product Portfolio: The company is continuously expanding its product portfolio beyond inverters and stabilizers, venturing into LED lighting, solar products, and EV charging solutions. This diversification mitigates risk and caters to a wider customer base.
- Strong Brand Recognition: Servotech enjoys a strong brand recognition in India and abroad, particularly for its power backup solutions. This reputation can be leveraged for new product launches and market expansion.
- High Promoter Holding: The high promoter holding (60.6%) indicates a strong commitment to the company’s long-term growth and stability, which can be attractive to investors.
- Government Initiatives: Government initiatives like FAME-II and subsidies for solar products are expected to boost the demand for Servotech’s offerings.
Challenges:
- Intense Competition: The Indian power electronics market is highly competitive, with established players like ABB, Siemens, and APC. Servotech needs to constantly innovate and differentiate itself to maintain market share.
- Fluctuations in Raw Material Prices: The company’s profitability can be impacted by fluctuations in the prices of key raw materials like electronic components and metals.
- High Debt-to-Equity Ratio: The company’s debt-to-equity ratio of 0.53 is higher than average, which could increase its financial risk.
- Negative Cash Flow: The company has reported negative cash flow from operations in recent quarters, which could limit its ability to invest in growth initiatives.
- Dependence on Promoters: The high promoter holding, while positive for stability, can also limit the company’s access to external capital and governance transparency.
Overall, Servotech Power Sys is a company with promising growth potential, driven by the rising demand for EVs and EV charging infrastructure. However, it needs to address its challenges related to competition, profitability, and financial structure to ensure sustainable long-term growth
Risk Assessment of Servotech Power Systems Share
Comprehensive Risk Analysis
- Technological shifts like wireless charging of EVs using could disrupt Servotech’s EV business
- Delay in renewable energy investments may affect its growth plans
- Rising competitive intensity can create pricing pressure, impacting profitability
- Input cost inflation due to global supply chain issues can squeeze margins
- Attrition of key managerial talent could hamper operations
Mitigation Strategies
- Diversify product mix beyond EVs to hedge risks
- Expand exports and global footprint to tap opportunities
- Ramp up R&D investments to build new technology capabilities
- Adopt lean manufacturing techniques and strategic sourcing to optimize costs
- Implement ESOPs and attractive incentive policies for talent retention
Conclusion
The analysis indicates strong upside potential in Servotech’s share price owing to its market leadership, innovative products, and financial stability. The long-term EPS CAGR forecast stands at 25% supported by structural growth drivers. However, technological disruptions and rising competition pose risks. Appropriate diversification and risk mitigation strategies could help Servotech sustain its growth momentum.
Ongoing monitoring of Servotech’s financials, industry trends, competitive landscape and technology disruptions is crucial for investors to maximize returns by identifying growth opportunities and risks early on. Periodic assessment of financial health, shareholding patterns, and market sentiment is key for long-term value creation.
References and Citations
Financial Reports:
- Servotech Power Systems Limited Annual Report 2023-24: https://www.servotech.in/investors/financials/Q3-FY-2023-2024
- Servotech Power Systems Limited Financial Results: https://www.moneycontrol.com/financials/servotechpowersystems/results/quarterly-results/SPS04
- Quarterly Investor Presentations: https://www.servotech.in/blog/wp-content/uploads/2023/07/Investors-Presentation-Q1-FY-2023-2024-1.pdf
Analyst Reports:
- Crisil Research Report on Servotech Power Systems:
- Motilal Oswal Research Report on Servotech Power Systems
Disclaimer: This analysis of Servotech Power Systema share price targets is for informational purposes only, not investment advice. I’m not a SEBI-authorized expert. Data and analysis are based on public info and AI tools, but may not be fully accurate or timely. Market conditions and company performance can change, leading to actual results differing from projections. Always do your own research and consult a qualified financial advisor before making any investment decisions