# 1. Financial Performance ## A. Key Figures * **Revenue:** **9% YoY growth** (Q3 & 9M FY2026) * **EBITDA Margin:** **>24%** in Q3 (+400+ bps YoY) * **Dividend:** **₹2 per share** interim dividend declared ## B. Revenue Growth * **Price-Driven Expansion:** Revenue growth increasingly fueled by **price realization** rather than volume, as shift from strip to component supply lifts value per unit. * **Value Realization Upside:** Management projects **12–15% value growth** from just **5% volume increase**, underscoring pricing power in forward-integrated segments. ## C. EBITDA Margin * **Disproportionate Margin Expansion:** Profitability improved significantly year-on-year, driven by **favorable product mix**, **higher shipments of value-added components**, and **cost discipline**. * **Segment Margin Divergence:** **PCB assembly** margins targeted at **70–80%**, while **busbar** margins pressured at **12–13%**, ~100 bps below normal. * **Sustained Consolidated Margins:** Despite lower-margin forward-integrated products, group EBITDA margin expected to hold at **23–25%** on volume leverage and low incremental costs. ## D. Working Capital * **Elevated Working Capital Days:** Net working capital extended to **250–260 days**, due to inventory buildup from early consignments and **collection period now near 90 days**. * **Corrective Measures Underway:** Plan to reduce inventory via **3–4 new domestic suppliers** and implement **tripartite financing agreements** to secure early payments, targeting return to prior-year levels by **March 26 quarter**. ## E. Dividend & Capex * **Shareholder Returns Maintained:** Interim dividend of ₹2 per share underscores commitment to **consistent capital allocation** and investor returns. --- # 2. Product & Segment Performance ## A. Key Figures * **Volume Growth (9M):** 3% overall (+4–5% FY guidance) · **Shunt & Bimetal:** +5% YoY * **Shunt Revenue Mix:** 60% automotive · 35% energy meters · 5% appliances/other * **Bimetal Market Allocation:** 80% switch gear · 20% automotive, meters, appliances * **Assembly Value per Unit:** ₹2,000–3,000 (2W) · **>₹5,000** (4W) * **FY27 Revenue Projections:** **₹50–55 Cr** PCB assembly · **₹70–75 Cr** busbar+PCB assembly * **FY27 Growth Outlook:** Shunt: **13–19%** · Bimetal: **8–10%** (India/select markets) ## B. Shunt Business * **Strategic Upskilling:** Moving up the value chain via precision engineering in high-stakes, failure-sensitive applications, enhancing revenue visibility and technical differentiation. * **Forward Integration Impact:** New business unit reflects 12-month development; delivers ~10x topline per program despite 8–10% lower EBITDA margins, with **sustainable absolute margin expansion** due to scale and EB welding expertise. * **Operating Leverage Inflection:** Shunt margins highly sensitive to volume; now recovering past underutilization as revenue hits "sweet spot," driving margin re-acceleration. * **Diversified Exposure:** Two major projects underway involving **four EB-welded components each**, with design-dependent busbar adoption across two-wheeler platforms. ## C. Bimetal Segment * **Core Industrial Focus:** Dominant exposure to switch gear (80%) supports stable demand, with limited automotive and meter spillover. * **Moderate Growth Trajectory:** Mid-single-digit expansion expected in India and select regions; US market outlook remains uncertain. ## D. Assembly Revenue * **High-Value Assembly Scaling:** Forward-integrated assemblies (busbar, PCB) represent a **multiplier effect on profitability**, with majority value from high-end two- and four-wheeler programs. * **Revenue Composition:** Total forward-integrated assembly pipeline targets **₹250–300 Cr**, led by busbar-centric designs; material costs account for **60–65%** of total assembly value. ## E. Revenue Mix * **Component-Dominant Model:** Over **60% of sales** now in finished component form, reflecting successful shift from strip-based commoditized supply to value-added solutions. --- # 3. Order Book & Demand ## A. Key Figures * **Content per Vehicle:** **₹2,000–3,000** (60–65% material cost) ## B. EV Two-Wheeler Projects * **Strategic Market Entry:** Targeting all major Indian two-wheeler OEMs amid a structural shift from imported to domestic EV systems, catalyzed by ECMS and PLI schemes. * **Project Momentum:** Engaged in two active EV busbar projects with the **top two largest two-wheeler manufacturers**; broader pipeline under development. * **Near-Term Order Softness:** Initial period saw subdued order volumes on negative tolerance, likely tariff-related, with recovery expected in the near term. ## C. US Customer Recovery * **US-Centric Growth Dependency:** Thermostatic bimetal demand remains tied to the US switchgear market, where the company serves all major players but faces constrained share gains due to prior tariff disruptions. * **Vishay Supply Resumed:** Resumed shipments to Vishay, which has developed components for the **top two global EV makers**, now contributing to revenue. * **Asia Growth De-coupled:** Rest of Asia sales growth is independent of US trends; pre-existing white-label arrangement with Vishay was logistics-driven and tariff-agnostic. ## D. New Product Pipeline * **Automotive Electronics Expansion:** Exploring entry into specialized **automotive fuses** (e.g., power windows, tailgates) using copper strips with low-melting-point alloys, differentiating from commoditized offerings. * **Adjacent Component Opportunities:** Evaluating **automotive inductors** and other electronic components aligned with core manufacturing capabilities. ## E. Content Per Vehicle * **Variable Design Integration:** No standard busbar count per vehicle—usage is fully design-dependent across two-wheeler platforms. * **Value Capture Upside:** Current ₹2,000–3,000 content per vehicle includes significant component-level variation, with higher-value opportunities now accessible due to local assembly shifts. --- # 4. Manufacturing & Capacity ## A. Pune Facility Setup * **Strategic Expansion:** New Pune facility marks a move up the value chain, targeting e-mobility and energy storage with **phased ramp-up from Q1 FY27**. * **Demand-Driven Timing:** Facility located in rented, ready-to-use space to meet **urgent customer delivery timelines**, driven by **four to five major regional projects** and higher-than-expected order volumes. * **Rapid Execution:** Setup accelerated by existing core manufacturing infrastructure, enabling fast deployment and **high asset turnover**; future expansion contingent on electronics opportunities. ## B. EB Welding Advantage * **Tariff-Driven Value Shift:** US tariff environment has prompted shift from raw welded strip exports to **higher-value finished components**, particularly shunts, enhancing value addition and reducing exposure. ## C. Capex Allocation * **Efficient Investment:** ₹20 Cr capex fully internal and incremental, focused solely on assembly—**majority of high-cost capex (e.g., welding) already completed** under past PLI schemes. ## D. US Packaging Plans * **Market Proximity Strategy:** Actively reevaluating **US final packaging or storage setup** (organic or partnered) to serve customers better, reversing prior delays caused by tariff uncertainty. --- # 5. Technology & Barriers ## A. EB Welding Expertise * **Core Technical Advantage:** Busbar and resistor businesses are underpinned by proprietary expertise in **electron beam (EB) welding**, a high-barrier process not widely available globally and currently **unavailable among Indian manufacturers**. * **Deep Knowhow as Moat:** Over **30 years of operational experience** in EB welding—originally developed for legacy applications—provides a durable competitive edge that is difficult for new entrants to replicate. * **Performance & Quality Edge:** EB welding enables **superior joint integrity with minimal disruption to current flow**, enhancing accuracy in precision components like shunts, while also offering **higher manufacturing efficiency** than mechanical methods. ## B. Technical Differentiation * **Strategic Focus on High-Barrier Segments:** Company prioritizes core businesses where **technical complexity, customer approvals, and long-term relationships** create structural entry barriers and sustain margins. * **Legacy Knowhow, Modern Applications:** Historical experience in EB welding for color picture tubes in the 1990s forms the foundation for current leadership in **precision electronic components**, including resistors and busbars. ## C. R&D Resumption * **Near-Term R&D Monetization:** New applications for bimetal bonding and joining technologies are already **designed, developed, and production-ready**, signaling imminent revenue potential from underutilized capacity. * **Strategic Expansion into Automotive Fuses:** Exploring use of EB welding in automotive fuses with **positive initial test results**; evaluating **technology partnerships or acquisitions** to accelerate commercialization. ## D. No Local Competition * **Monopoly-Like Position in India:** Currently **no domestic competitor** offers EB welding-based busbar assemblies, and imports are discouraged by local manufacturing mandates, reinforcing Shivalik’s first-mover advantage. --- # 6. Risks & Tariff Impact ## A. US Tariff Exposure * **Demand Disruption, Not Loss:** US order volumes declined due to **50% tariff levels**, but no customers were lost—purchases paused amid uncertainty. * **Strategic Shift Accelerated:** Tariff barriers forced rapid shift from strip to **finished component exports**, compressing an 18-month transition into a near-term rollout. * **Long-Term Gain from Short-Term Pain:** Component-focused model enhanced value capture and development speed, turning tariff pressure into a **structural competitive advantage**. * **Project Delays, Not Exit:** Export growth stalled as US clients paused new qualifications and designs, but activity expected to resume with clarity. ## B. Input Cost Volatility * **Raw Material Pass-Through:** Pricing mechanism fully offsets input cost swings, protecting margins despite volatility in silver and base metals. * **Silver Exposure Managed:** Spike in silver prices had limited impact due to **strategic inventory buffers** during factory transition. * **Component Pivot Justified:** Even post-tariff reduction, raw material exports remain uneconomical—validating shift to higher-value component manufacturing. --- # 7. Guidance & Outlook ## A. Key Figures * **FY27 Revenue:** **₹70–75 Cr** (new assemblies) * **Revenue Outlook:** **₹150–200 Cr** expected in FY28 · **₹250–300 Cr** over three years ## B. FY27 Revenue View * **Growth Trajectory:** Revenue from new assembly operations on track to scale significantly over three years, supported by Pune plant capacity and secured Vishay orders. * **Tariff Recovery:** US export business expected to rebound with **higher-value components**, reversing prior disruptions and lifting profitability. * **Guidance Context:** FY27 growth expectations tempered by geopolitical and tariff headwinds but remain within a stable range, with improvement anticipated in coming quarters. ## C. Margin Sustainability * **Sustainable Profitability:** Margin expansion expected to be durable, driven by high-margin new revenue streams and disciplined investment. * **Execution Focus:** Growth is being coupled with improving economics through tighter operational execution. ## D. Growth Drivers * **US Business Rebound:** Resumption of Vishay collaboration and **restart of paused product development** to drive export growth and market share gains in thermostatic bimetal segment. * **Strategic Positioning:** Focus on becoming indispensable to customers is enhancing **customer stickiness** and long-term demand resilience. * **Forward Momentum:** Management expects performance to improve sequentially, with **positive impacts visible this quarter and next**. ## E. PLI Scheme Update * **Scheme Transition:** PLI replaced by ECMS; Shivalik’s application under review with **near-term approval expected**, potentially unlocking financial and operational benefits.