Detailed Narrative
Q3 & 9M FY26 Performance Overview
Shivalik Bimetal reported a 9% year-on-year revenue growth for both Q3 and the 9-month period of FY26. The company demonstrated strong profitability, with the EBITDA margin expanding by over 400 basis points year-on-year to close above 24% in Q3. However, Q3 was noted as challenging due to unpredictable geopolitical factors and US tariffs, which led to reduced orders from US-based customers.
Strategic Expansion into High-Value Assemblies
The company is advancing its value chain integration by establishing a new facility in Pune for automotive bus bars and connectors, with a ₹200 million (₹20 crores) capex. This facility, planned for launch in 2026 with phased capacity addition from Q1 FY27, aims to broaden participation in e-mobility and energy storage applications. This new assembly business is projected to generate ₹70-75 crores in FY27, growing to ₹150-200 crores in FY28, and ₹250-300 crores by FY29.
US Market Dynamics and Tariff Impact
Initially, US tariffs caused reduced orders, but they also prompted a strategic shift from supplying raw material strips to higher-value components, which proved beneficial. Management expects considerable improvement in US exports of shunts and bimetals in the coming quarters⏳. The Vishay business is anticipated to return to its peak levels, and new components for global EV manufacturers are already contributing to revenue.
Indian Market and Bimetal Business
The Indian thermostatic bimetal market's growth is primarily driven by the switchgear industry, which has experienced a flat performance over the last four years. To counter this, Shivalik Bimetal is exploring new applications beyond switchgear and aims to increase its market share in the US. The company expects 8-10% volume growth in the Indian bimetal segment and 13-19% in the shunt baseline business.
Capital Allocation and Shareholder Returns
The board demonstrated its commitment to shareholder returns by declaring an interim dividend of ₹2 per equity share. The ₹200 million capex for the new Pune facility will be managed through internal approvals, reflecting a disciplined approach to investment. The company is also exploring potential acquisitions of technology or companies in the automotive fuse space.
Working Capital Management
Net working capital days increased to 250-260 days, attributed to higher inventory and extended collection periods. To address this, management is implementing measures such as tripartite agreements with financial institutions for upfront payments from customers and developing domestic raw material suppliers. The goal is to bring working capital days back to the previous year's range by March 2026.
New Product Verticals and EB Welding Advantage
Shivalik Bimetal is actively working on new product verticals, including various types of automotive fuses, and is open to acquiring technology in this area. The company's significant technical know-how in EB welding, accumulated over 30 years, provides a strong barrier to entry for competitors. This expertise allows for efficient manufacturing of high-value components where precision is critical, such as busbars and resistors.