Servotech Renewable Power System Limited

Servotech reported a robust Q4 FY26 with standalone revenue growing 76% YoY to ₹212.2 crores and standalone EBITDA also increasing 76% YoY to ₹23.2 crores. For the full year FY26, standalone revenue reached ₹637 crores, an 8.4% YoY growth from ₹587 crores in FY25. Operating EBITDA for FY26 stood at ₹74.2 crores, marking a 26.5% YoY increase, with the EBITDA margin expanding by 161 basis points to 11.6%, the highest in the company's listed history.

On a consolidated basis, FY26 revenue was ₹674 crores, broadly flat compared to ₹676 crores in FY25. Consolidated EBITDA grew 22% to ₹71 crores, while PAT attributable to shareholders was ₹33.5 crores, in line with FY25's ₹32.7 crores. The flat consolidated revenue was attributed to a deliberate scale-down of low-margin trading activities in the Rebreathe Medical Device subsidiary, whose revenue declined from ₹98 crores in FY25 to ₹32 crores in FY26. Excluding this subsidiary, consolidated revenue grew approximately 12% YoY.

FY26 was a year of significant capability building, with ₹64 crores invested in commissioning a new manufacturing line for solar hybrid inverters, grid-tied models, and lithium-ion battery packs. This CapEx program is largely complete and is expected to support growth in FY26-27. A structural shift towards solar inverters and higher capacity DC chargers (120kW to 360kW) and BESS contributed to a 200 basis point margin expansion, which management expects to sustain or modestly improve.

The company's retail channel has seen substantial growth, increasing from ₹2 crores per month in FY22 to approximately ₹25 crores per month in FY26. To support this scaling, Servotech has engaged a brand ambassador, launched TV advertisement campaigns, and undertaken extensive marketing activities. Investments in cricket through the Siliguri Strikers franchise and group entities like Servotech Sports and Entertainment are also supporting retail channel scale-up.

Servotech faced working capital challenges in FY26, with standalone borrowing increasing from ₹75 crore to ₹196 crore and trade receivables rising from ₹155 crore to ₹243 crore. Operating cash flow was negative for the year. Approximately ₹100 crore of receivables are stuck due to payment delays from oil marketing companies and railway projects. For FY27, management's focus is on restoring positive operating cash flow, reducing gearing below half a turn, and bringing receivable collection back to industry typical levels, targeting 60-70 working capital days.

For FY27, Servotech anticipates strong demand across its solar, inverter, and DC charger segments, driven by government EV infrastructure rollout and BESS applications. The year will focus on operational consolidation, leveraging FY26 capacity additions. Management expects margin expansion to be structural and aims for modest improvement. The company plans to fund future CapEx entirely from internal accruals and targets a product mix of 60% Solar and 40% EV.

Management clarified that Indian battery manufacturing primarily involves assembly, as cells are not made in India. Servotech adds value through Battery Management Systems (BMS), software, mechanical design, and thermal engineering. Their products have received ICAT approval. For EV chargers, the company is focusing on high-capacity chargers (120kW to 360kW, and even 1MW) for large vehicles, noting that 70-80% of the manufacturing process for EV chargers and solar inverters is common.