Servotech Renewable Power System Limited

Industrials — Electrical Equipment & Parts · NSE

₹69.89+₹0.95 (+1.38%)

DalalBaazaar Score

53 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Servotech Renewable Power System Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Servotech Renewable Power System Limited manufactures and sells light-emitting diode (LED) lights, electric vehicle (EV) chargers, and solar power products in India and internationally.

IndustryElectrical Equipment & Parts

SectorIndustrials

Employees392

Annual revenue₹672 Cr

How does it make money?

Turns over ₹672 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 392 employees supports ₹1.71 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin10.4%

Net margin5.0%

Revenue / employee₹1.71 Cr

Who are its competitors?

The closest listed comparisons in its industry are SIEMENS LTD, ABB INDIA LIMITED, HAVELLS INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

HAVELLS INDIA LIMITEDP/E 43.5x · ROE 17.1%

What is its competitive advantage?Little sign of one

Returns on capital of 14.1% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE14.1%

ROE11.7%

Peer median ROE17.1%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +141% while net margin moved +26% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+141%

Margin effect+26%

DalalBaazaar Score

53/ 100

Moderate

Weighted across six categories. Every point is explained below.

• ROCE of 14.1% is adequate but not distinctive
✗ ROCE has fallen by 4.4 points — returns are eroding
✗ EBITDA margin of 10.4% is thin — little cushion if costs rise
✗ Net margin of 5.0% is slim
• Revenue has compounded at 34.1% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

57/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

64/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

42.6x

3Y Median

150.9x

40 monthly readings · mean 156.2x · range 40.7x–349.3x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 72% below its 3y median of 150.9x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 52% below the peer median of 88.8x.

vs. its own history

Cheap

150.9x median over 40 months · -72%

vs. sector peers

Cheap

88.8x median of 3 peers · -52%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

42.6x

P/B

5.52x

EV/EBITDA

25.7x

PEG

0.95

Dividend Yield

0.03%

What's Good / What's Bad

🟢 What's Going Well2

Valuation below its historical average
At 42.6x the stock trades 72% below its own median of 150.9x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Debt is rising
Total debt is up 385% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from 18.5% to 14.1% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 187% against revenue growth of 141% — stock may not be moving.

Red Flags

5 items require attention · 2 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 385% over 3 years, from ₹44 Cr to ₹211 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 8.0x to 4.8x.
🟡Inventory building faster than salesFinancial
Inventory up 187% against revenue up 141% — stock may not be moving.
🟡Low reported insider holdingOwnership
Reported insider holding is 0.0%. For Indian companies this field is an unreliable proxy — check the official promoter shareholding in the exchange filing.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 72% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 52% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.0x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 26% a year✓ 34.1% CAGR
Latest reported year was 57.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 8%✓ 10.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.0x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹105 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 11%✓ 14.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 5 neutral · 3 weak

Market Cap

₹1,578 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

42.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

5.52x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹1.64

Profitable

Profitable on a per-share basis

ROE

11.7%

Moderate

Moderate capital efficiency

ROCE

14.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.71x

Moderate

Moderate leverage

Revenue Growth (YoY)

57.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

78.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.03%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹105 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹69.89

Operating Margin

6.9%

Average

Average margins

Net Margin

5.0%

Average

Average bottom-line conversion

Current Ratio

1.46

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.21

Defensive

Steadier than the market

52W Range Position

18%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

70.5 / 76.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

46.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹278 Cr	₹354 Cr	₹674 Cr	₹672 Cr	+34.1%
EBITDA	₹28 Cr	₹22 Cr	₹58 Cr	₹70 Cr	+34.9%
EBITDA Margin	10.2%	6.3%	8.6%	10.4%	—
PAT (Net Profit)	₹11 Cr	₹12 Cr	₹33 Cr	₹34 Cr	+44.9%
EPS	₹0.52	₹0.54	₹1.45	₹1.45	+40.8%
ROE	13.4%	8.3%	13.8%	11.7%	—
ROCE	18.5%	11.7%	19.3%	14.1%	—
Total Debt	₹44 Cr	₹76 Cr	₹78 Cr	₹211 Cr	+69.3%
Free Cash Flow	-₹37 Cr	-₹25 Cr	-₹74 Cr	-₹105 Cr	—

🟢 Revenue has grown at 34.1% a year over 3 years.

🟢 EBITDA has grown at 34.9% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 10.4% over 3 years.

🟢 PAT (Net Profit) has grown at 44.9% a year over 3 years.

🟢 EPS has grown at 40.8% a year over 3 years.

🔴 ROE has fallen from 13.4% to 11.7% over 3 years (-1.8 pts).

🔴 ROCE has fallen from 18.5% to 14.1% over 3 years (-4.4 pts).

🔴 Total Debt has grown at 69.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹685 Cr

Total Liabilities

₹389 Cr

Total Debt

₹211 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

-₹2 Cr

Capex

-₹103 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

0.0%

Corporate Actions

Dividend Rate

₹0.02

Ex-Dividend Date

18 Sept 2026

Peer Comparison

Company	P/E	ROE
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%
HAVELLS INDIA LIMITED	43.5x	17.1%

Recent News

1 positive1 negative4 general

Servotech Renewable Power promoters report no new encumbrances in FY26

scanx.trade, 18 Oct

Multibagger Stock Alert: Green Energy Stock Surges On Solar Project From UP Govt | Do You Own?

Goodreturns, 15 Oct

Here's Why We Think Servotech Renewable Power System (NSE:SERVOTECH) Might Deserve Your Attention Today

Simply Wall Street, 04 Aug

Servotech Renewable Power System Share: Bull Case vs Bear Case for 2026

Univest, 24 Sept

Servotech Renewable Power System Q1 Results: PAT jumps 75% YoY; revenue up 58%

Livemint, 21 JulResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Servotech Renewable Power System Uncovers Internal Fraud Related To Inventory Removal

Sahi, 23 JulRegulatory

🔴Potentially negativeRegulatory and legal actions carry a financial cost and a governance question. The second usually matters more than the first.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Reported insider holding is low — cross-check the official promoter shareholding % in the company's exchange filing.

DalalBaazaar Thesis

🔴Business QualityWeak7.5/20

🟡Financial HealthAdequate9.8/20

🟢GrowthStrong18.5/20

🔴ProfitabilityWeak6.5/15

🔴ValuationDemanding6.7/15

🔴RiskHigh4/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 26% a year34.1% CAGR
✓EBITDA margin holds above 8%10.4%
✗Debt / EBITDA falls below 3x3.0x
✗Free cash flow remains positive-₹105 Cr
✓ROCE stays above 11%14.1%