EV And Renewable Energy Trends Will Shape Future Demand

Key Takeaways

• Expansion into advanced, value-added products and process automation is expected to boost margins, operating efficiency, and revenue diversification both domestically and internationally.
  
• Rising global demand in EVs, smart metering, and renewables, alongside supply chain shifts and favorable localization policies, positions the company for sustained growth and increased exports.
  
• Heavy reliance on legacy automotive and electrical segments, delayed new product ramp-up, and industry shifts toward alternatives threaten revenue growth and margin stability.

Catalysts

Engages in the process and product engineering business in India, the United States, Europe, and internationally.

• The company is gearing up for commercialization of forward-integrated, value-added products such as smart DC sensor-mounted shunts and advanced PCB assemblies, which are expected to command higher margins (40-50% EBITDA vs current 22-23%) and significantly increase revenue contribution by FY'27-driving sustainable earnings and net margin expansion.
  
• Structural global investment in EVs, smart metering, and renewable energy infrastructure is pushing up demand for high-precision components like shunt resistors and bimetals. Shivalik is already seeing strong momentum in these segments (e.g., 30%+ growth in smart meter and auto shunt business), positioning it for robust revenue and export growth as these long-term trends accelerate.
  
• Localization policies (BIS compliance push and Make in India) and the global China+1 supply chain realignment are creating tailwinds both for growing domestic market share (e.g., import substitution in relays/contacts for smart meters) and for winning international customers currently over-exposed to China-enabling steady topline diversification and reducing margin pressures from global volatility.
  
• Advancements in process automation, R&D, and capacity upgrades are expected to drive down costs, improve product consistency, and enhance scalability. This will support operating efficiency and margin expansion, especially as the mix shifts toward more complex and customized products with higher pricing power.
  
• Customer feedback indicates strong, multi-year growth intent, especially in switchgear, smart metering, and energy storage, with major OEMs targeting 2x growth by 2028–2029. This underpins strong forward-looking visibility on order inflow, supporting both top-line acceleration and medium-term earnings upside.

Shivalik Bimetal Controls Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Shivalik Bimetal Controls's revenue will grow by 18.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 15.2% today to 19.3% in 3 years time.
• Analysts expect earnings to reach ₹1.6 billion (and earnings per share of ₹27.0) by about July 2028, up from ₹770.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 37.9x on those 2028 earnings, down from 41.5x today. This future PE is greater than the current PE for the IN Metals and Mining industry at 23.1x.
• Analysts expect the number of shares outstanding to decline by 0.27% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.6%, as per the Simply Wall St company report.

Shivalik Bimetal Controls Future Earnings Per Share Growth

Risks

• Two years of stagnant top-line growth (FY '23–'25 revenue flat near ₹450–500 crore, and management only guiding for 15–18% growth in FY '26) suggests potential challenges in capturing the addressable market or sectoral slowdowns; persistent stagnation could negatively impact long-term revenue and earnings growth expectations.
  
• Heavy reliance on core automotive (37% of revenue) and electrical/smart meter segments exposes Shivalik to sector-specific downturns, regulatory changes, or technological shifts-especially since any broad move to solid-state, digital, or alternative current sensing technologies could erode demand for bimetallic and shunt products, impacting future revenue and margin stability.
  
• Forward integration and new value-added product ramp-up (e.g., smart DC sensor-mounted shunts and subassemblies) face delays of 12–24 months for validation and commercial scale (earliest revenue contribution from FY '27); prolonged development cycles or unsuccessful commercialization could result in revenue shortfalls and below-expected net margins.
  
• Increasing input cost risks and margin pressures stemming from potential global supply chain volatility, commodity/raw material price swings (particularly for niche metals/alloys), and evolving ESG/regulatory requirements on metals processing, could squeeze margins industry-wide and directly affect Shivalik's future earnings.
  
• Emerging trends like global adoption of advanced composites, digital/solid-state sensors, or alternative materials in switchgear, energy, and automotive applications pose long-term substitution risks for legacy bimetallic products, potentially shrinking Shivalik's core addressable market and adversely impacting sustainable revenue and earnings growth.

Valuation

• The analysts have a consensus price target of ₹734.0 for Shivalik Bimetal Controls based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹8.4 billion, earnings will come to ₹1.6 billion, and it would be trading on a PE ratio of 37.9x, assuming you use a discount rate of 13.6%.
• Given the current share price of ₹554.9, the analyst price target of ₹734.0 is 24.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.