Shivalik Bimetal Controls Limited

Shivalik Bimetal reported a strong Q1 FY26, with EBITDA growing 32.5% and margins expanding by 452 basis points to 25.26%. This performance was driven by a favorable product mix, cost discipline, and operating leverage. The company maintained a robust balance sheet with ₹77 crore in net cash and achieved a Return on Capital Employed (ROCE) of 24.65% for FY25, providing ample room for strategic investments. Working capital efficiency also improved, with inventory days reducing by 20 to 177 and net working-capital days down by 29 to 212.

The company is executing a clear strategy to build a durable, higher-quality growth engine by shifting from stand-alone precision parts to assembly-level solutions. This is supported by in-house R&D, advanced tooling, and pilot prototyping, aiming to tighten its role within customer platforms and shorten time-to-commercialization. A Centre of Excellence and R&D facility is being prepared to accelerate product innovation in high-value, technology-intensive components, leveraging existing electron-beam welding and diffusion bonding capabilities.

Shunt Resistors now constitute approximately 49% of standalone revenue, highlighting their increasing relevance. Within the Shunts segment, India saw a 19.12% year-on-year growth, reaching ₹20.29 crore, primarily driven by smart metering and industrial demand. Rest of Asia also grew significantly by 62.81% from a lower base. The smart meter segment, which generated ₹40 crore last year, is expected to reach ₹70-75 crore this year and ₹100 crore by the next financial year, with an overall potential for Shivalik of ₹140-150 crore.

The bimetal segment experienced a gross margin improvement of approximately 215 basis points due to a favorable product mix, with components yielding higher realization than parts. While domestic bimetal growth has been subdued, management expects a rebound to double-digit growth this year, aligning with the growth of key customers like ABB and Siemens in other verticals. Export markets, particularly in the West, faced softer demand and dynamic conditions, including tariffs. However, the company is diversifying its portfolio to other regions like Japan, Korea, and China, and leveraging forward integration to mitigate tariff impact^🌐s.

Shivalik is actively developing new product verticals, including PCB-mounted assemblies for current sensing, which are expected to contribute an additional ₹150 crore in revenue by the financial year after this one (FY27). These solutions integrate PCBs and other components with shunts to provide a ready-to-use, calibrated unit, reducing overall system error. Additionally, the company is at an advanced stage of developing bus bars and battery connectors for two-wheeler and three-wheeler EV applications, a brand new vertical with an estimated addressable market of ₹2000-2500 crore, targeting ₹200-300 crore over the next three years.

Management emphasized that the current gross margin expansion is sustainable for the year, driven by product mix and operating leverage. While new forward integration initiatives like PCB assemblies might have slightly lower gross margins, their significantly higher top-line value will more than compensate. The company aims to maintain blended EBITDA margins upwards of 20%, with a potential range of 16-17% for certain new product mixes. The focus remains on maintaining a strong technical barrier and avoiding commoditized processes in new ventures.