Servotech Renew

Servotech Renewable Power System Limited reported a robust Q1 FY26. On a standalone basis, total revenue surged by 28% YoY to ₹12,513.59 lacs, with EBITDA jumping 63.65% to ₹1,423.17 lacs and PAT growing 59.18% to ₹755.06 lacs. Consolidated performance also showed strong growth, with total revenue increasing 22% YoY to ₹13,716.54 lacs and EBITDA rising 26.87% to ₹1,038.18 lacs. Consolidated PAT, however, saw a more modest growth of 1.36% to ₹455.06 lacs, which management attributed to the sale of some shareholdings not reflected in consolidated reports.

The company is strategically shifting its focus towards the solar and energy storage segments. While Servotech aims to maintain an equal focus on both solar and EV, current challenges in EV charging infrastructure, which the government is still addressing, have led to slower progress in the EV business. Consequently, the company is temporarily prioritizing the solar sector, with an expectation that solar will contribute 60-70% of total revenue this year, a reversal from previous years. This pivot is supported by initiatives like the acquisition of a 27% stake in Rhine Solar for backward integration and improved profit margins.

Servotech is actively pursuing international expansion, leveraging the advisory role of Mr. Errol Musk, father of Elon Musk, to tap into global markets. The company plans to establish a new subsidiary in the UAE, with operations expected to commence before August 15. This expansion aims to supply EV chargers and solar systems to countries in the Gulf Cooperation Council (GCC) and African regions, seeking benefits from subsidies and treaties to become more cost-effective than China.

In the EV segment, Servotech is concentrating on developing on-board chargers, which are integral units fitted within electric vehicles during manufacturing. The goal is to become an OEM supplier, securing a fixed share in this critical component segment for all EVs manufactured in India, including two-wheelers, three-wheelers, and e-rickshaws. This strategy aims to establish a strong foothold in the market and address the current reliance on imports, primarily from China.

Despite a strong order book, Servotech is facing execution challenges due to supply chain pressures. Specifically, there is a significant gap in the supply and demand of DCR (Domestic Content Requirement) components, leading to raw material shortages. This issue is expected to create pressure in the second quarter, potentially impacting the full utilization of the company's production capacity. Management is actively working to mitigate these challenges by securing more suppliers and improving backward integration.

Servotech's customer mix is approximately 60% from the public sector, including government tenders, projects, and PSUs, while 40% comes from the retail market, channel distribution, and e-commerce. Historically, EV contributed 60-70% of total revenue, but the company anticipates a reversal this year, with solar expected to account for 60-70%. However, in Q1 FY26, EV still represented 62% of the total revenue, indicating a potential lag in the expected shift or a temporary fluctuation.