India Smart Meter Production And EV Trends Will Expand Markets

Key Takeaways

• Rising domestic manufacturing, government policy, and electrification are driving strong demand and market share growth, with advanced assemblies expanding revenue streams.
  
• Export gains from electric vehicle trends and localization, along with R&D and efficiency improvements, are diversifying risk and sustaining margins and innovation.
  
• Multiple headwinds-from tariffs and market unpredictability to margin-dilutive expansion-threaten Shivalik's growth prospects, earnings stability, and competitive position in core and new segments.

Catalysts

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

• The accelerating domestic manufacturing of smart meters and relays in India is creating outsized demand for Shivalik's shunts and silver contacts, with management guiding for near-doubling of smart meter-related revenues over the next year and indicating that government policy and industry capacity increases will drive further revenue growth and market share gains as electrification deepens across infrastructure and utilities.
  
• The shift from stand-alone components to advanced assembly-level solutions (such as PCB-mounted shunt assemblies and battery connectors) is expected to multiply top-line potential, with forward integration projects alone targeted to contribute ₹150 crore in added revenue by FY27, supporting both revenue and margin sustainability as product mix evolves toward higher value-add categories.
  
• The global trend toward electric vehicles and localization of supply chains (especially in India and Asia) is benefitting Shivalik, reflected by growing market share in Japan, Korea, and China and the company's penetration into major OEMs (including Hyundai and Tata), which will support export growth and help offset Western market volatility, improving topline stability and reducing customer/geographical concentration risk.
  
• Continuous investment in R&D, establishment of a new center of excellence and dedicated teams for new product verticals (e.g., busbars for two
• and three-wheeler EVs) are expected to accelerate innovation cycles, open new addressable markets, and build barriers to entry, sustaining long-term revenue growth and protecting gross/EBITDA margins from commoditization.
  
• Ongoing improvements in working capital efficiency, product mix shift toward "component over strip," and process automation are increasing gross margins (as seen in the 452 bps QoQ expansion to 25.3% EBITDA margin in Q1 FY'26) and bolstering earnings resilience, enabling the company to self-fund capex and innovation with minimal balance sheet risk, supporting both margin improvement and higher return on capital employed over the medium term.

Shivalik Bimetal Controls Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Shivalik Bimetal Controls's revenue will grow by 19.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 15.8% today to 19.5% in 3 years time.
• Analysts expect earnings to reach ₹1.7 billion (and earnings per share of ₹25.84) by about August 2028, up from ₹820.1 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 36.0x on those 2028 earnings, down from 36.9x today. This future PE is greater than the current PE for the IN Metals and Mining industry at 23.3x.
• Analysts expect the number of shares outstanding to decline by 0.25% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.62%, as per the Simply Wall St company report.

Shivalik Bimetal Controls Future Earnings Per Share Growth

Risks

• Recent imposition and frequent changes in U.S. tariffs-now as high as 50%-potentially threaten Shivalik's ability to win new business and grow in the U.S. bimetal market, which could result in stagnating or declining export revenues if tariffs persist long-term.
  
• Ongoing weakness and unpredictability in the domestic bimetal business, despite large market share, is reflected in recent quarters of declining or flat revenues and management's reliance on anticipated rebounds, raising questions about the sustainability of revenue growth and margin expansion in this segment.
  
• While forward integration into PCB assemblies and new products offers top-line growth, management has already acknowledged these initiatives will dilute gross margins relative to the core component business, potentially compressing company-wide net margins as the product mix shifts.
  
• Long product validation cycles (9-16 months) and a reliance on customer-driven design specifications slow time-to-market for new innovations, increasing the risk of delayed revenue realization and exposing Shivalik to rapid technology shifts or competitive advancements from global peers with stronger R&D capabilities.
  
• Intensifying geopolitical risk, including the push towards supply chain localization by large OEMs, greater regulatory scrutiny, and potential commodity input cost volatility, may drive up working capital needs, reduce pricing power, and squeeze free cash flows, directly impacting Shivalik's earnings and return on equity over the long run.

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 ₹8.7 billion, earnings will come to ₹1.7 billion, and it would be trading on a PE ratio of 36.0x, assuming you use a discount rate of 13.6%.
  
• Given the current share price of ₹524.9, the analyst price target of ₹734.0 is 28.5% 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.