Servotech Renewable Power System Limited

Servotech Renewable reported a strong sequential recovery in Q3 FY26, following challenges in the previous quarter. On a standalone basis, revenue increased to ₹202 crores, EBITDA improved to ₹27 crores, and PAT stood at ₹14.7 crores. Consolidated figures were higher, with revenue at ₹212 crores, EBITDA at ₹28.5 crores, and PAT at ₹15.5 crores. This improvement was attributed to enhanced cost discipline, an optimized product mix, and more efficient utilization of manufacturing and operational resources.

The company's revenue mix in Q3 FY26 saw solar emerge as the major contributor, while the EV charging segment accounted for less than 10%. Management explained that the Indian EV charging market is experiencing delays due to the government's shift from direct charger incentives (FAME schemes) to the PM E-Drive Scheme, which focuses on infrastructure development. In response, Servotech has 'totally focused on solar' in the interim, while actively developing new EV charging products for future opportunities.

Servotech has outlined aggressive growth plans across its key segments. The company aims to increase solar inverter manufacturing from over 10,000 units per month to 25,000 units per month within the next three months. For lithium batteries, the target is to scale production from a current plan of 5,000 batteries per month to 25,000 batteries per month within a year, projecting a business impact of over ₹100 crores. Overall, the company targets 40-50% revenue growth in the next year, with potential to double.

The company is strategically diversifying and expanding globally through subsidiaries, rather than mergers, to explore future growth areas without diluting its core focus. The newly established Dubai FZCO subsidiary will serve as an international hub for global expansion and a global procurement hub to enhance cost-effectiveness. This strategy is viewed as 'sowing seeds' for long-term growth, with plans for global market penetration within one to two years.

Servotech's investment in Rhine, a solar PV module manufacturer, is expected to significantly contribute to revenue growth. Rhine's revenue is projected to increase from ₹80 crores last year to ₹160 crores currently, with a target of ₹700 crores next year, where Servotech's share would be 70-80%. Concurrently, the company is expanding its channel distribution network, aiming to grow from over 4,000 retailers to 10,000 across India.

Servotech is actively integrating Artificial Intelligence across all its departments, including HR, to improve manpower capability and operational efficiency. A dedicated team of AI engineers and data scientists is working on futuristic dashboards, predictions, and SAP integration. Management clarified that AI is primarily an enabler for internal efficiency and capability enhancement, with strategic direction and revenue generation remaining the responsibility of human leadership.

Management acknowledged the potential impact of fluctuating raw material prices, such as silver and copper, on profitability but expressed confidence in managing these through cost discipline and other measures. They also highlighted that working capital intensity is an inherent aspect of government contracts in India, which the company actively manages to control its impact, ensuring it does not materially hinder operations.