Detailed Narrative
Q2 FY26 Financial Performance and Moderation
Servotech Renewable Power System Limited reported a period of moderation in Q2 FY26. Consolidated revenue stood at ₹107.65 crore, with an EBITDA of ₹7.44 crore (6.91% margin) and PAT of ₹0.3951 crore. For the first half of FY26, consolidated revenue was ₹244.82 crore and PAT was ₹4.94 crore. On a standalone basis, Q2 FY26 revenue was ₹10.3 crore, EBITDA ₹9.74 crore, and PAT ₹2.27 crore. Management acknowledged these results reflect a 'year-on-year moderation' and 'temporary softness' in revenues and profitability.
Strategic Initiatives and Market Diversification
Despite the current moderation, Servotech highlighted several strategic developments. The company secured multiple large-scale solar rooftop projects from Indian railways and state government agencies. International expansion is underway with significant tie-ups in Mauritius and a new subsidiary in Dubai. A partnership with Zhuhai Piwin aims for indigenous manufacturing of battery energy storage systems (BESS). Furthermore, customer service has been enhanced with an AI automated warehouse in Sonipat, and Mr. Sonu Sood has been appointed as a brand ambassador to expand grassroots market reach.
Challenges in the EV Charger Market
A significant headwind for the company is the 'plummet' in the EV charger market over the last 4-6 months. Management explicitly stated that government policies have changed, withdrawing all subsidies previously provided on hardware, which has caused nearly all projects, including those from HPCL, BPCL, and Adani Total Gas, to come to a standstill. The company is now focusing on buses, larger vehicles, and exports in the EV space, while also expanding its own Servotech EV Infra charging station network.
R&D Capabilities and Efficiency
Servotech maintains a dedicated R&D department with approximately 40-50 engineers and senior engineers, supported by tie-ups with various IITs and several patents. The company prides itself on efficiency, claiming to execute projects that would cost ₹100 crore for others at just ₹25 crore. Current R&D efforts are focused on manufacturing advanced EV chargers, upgrading grid-tied inverters up to 30 kW, developing hybrid inverter technology, and working on Lithium batteries and on-board chargers for two-wheelers and e-rickshaws.
Addressing Investor Concerns and Long-term Outlook
Management directly addressed investor concerns regarding the recent dip in share price and profitability. Raman Bhatia provided a historical perspective, noting that the company has experienced similar 'pauses' in its 21-year journey (e.g., stuck at ₹3 crore, then ₹40-50 crore revenue bands). He explained the current moderation as a necessary phase for 'tuning' infrastructure, manpower, and after-sales service for future scalability. He assured investors of a 'very bright future' and emphasized that promoter shareholding has continuously increased since the company's listing, demonstrating strong confidence.
Operational Adjustments and Short-term Challenges
The company is actively working on improving systems and processes for scalability, including recently separating its warehousing. However, changes in the GST regime led to delayed purchases, causing revenue from 4,000 retailers to drop to 10% of its previous level. Despite these operational challenges, management stated that the 'orders in hand (order book) are quite strong.' The current situation is expected to be 'very short-term,' lasting 'six months, three quarters, or a maximum of four quarters,' with Q3 FY26 results potentially 'not very good,' but the company remains confident in achieving its long-term plans.