The shares of this smallcap compnay locked a 10 percent upper circuit after enrolling 62 Distribution Companies under PM Surya Ghar Muft Bijli Yojana. On a YTD basis, the stock has delivered more than a 90 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 3,291 crores, the shares of Servotech Power Systems Ltd Tuesday’s trading session on a flatter note at Rs. 136.70 compared to its previous close of Rs. 134.23. During the trading session, the shares clocked a 10 percent upper circuit at Rs. 147.65 apiece, also recorded as the company’s fresh 52-week high.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced that it had expanded its reach significantly by enrolling with 62 Distribution Companies (DISCOMs) across India to facilitate the implementation of the PM Surya Ghar Muft Bijli Yojana, a government initiative aimed at promoting solar energy adoption among Indian households.
The PM Surya Ghar Muft Bijli Yojana, designed to promote household solarization and green growth, has garnered significant attention, with over 1.28 crore registrations and 14 lakh applications.
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Servotech’s participation in this initiative through enrollment with DISCOMs will enhance its effectiveness by increasing the accessibility and affordability of sustainable energy solutions for a broader audience.
Financials:
Looking at the company’s financial performance, the revenue decreased by around 18 percent from Rs. 136.17 crores during the March quarter to Rs. 112.19 crores in the June quarter. Contrastingly, the net profits increased by around 30 percent from Rs. 3.46 crores to Rs. 4.49 crores during the same timeframe.
Future Outlook:
Servotech is currently constructing a cutting-edge manufacturing facility focused on the production of essential EV charger components such as power modules, control circuits, and PLCs. This move aims to reduce reliance on imports and position India as a key player in the global EV charger supply chain.
The company aims to become one of the top 3 companies in the next 2 years and is focused on achieving strategic goals and demonstrating results to investors.
Moreover, the company is targeting a revenue of around Rs. 3,500 crores in the next 4-5 years, planning to increase market share, expand product offerings, and expect a significant increase in revenue by 2024.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 8.29 percent and a return on capital employed (RoCE) of 11.87 percent for the period spanning FY23-24. Additionally, during the same period, the net profit margin stood at 3.33 percent.
Company Profile:
Headquartered in New Delhi, Servotech Power Systems Ltd was incorporated in 2004. The company is engaged in is engaged in manufacturing LED lighting solutions, UPS (uninterruptible power supply) systems, EV charges, inverters, and batteries.
Written By Vaibhav Patil
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