JM Financial initiates coverage on this small cap stock, views upside potential of 20%

Domestic brokerage firm JM Financial initiated coverage on small cap stock Shivalik Bimetal Controls (SBCL) with a target price of Rs 730 as they believe that the company is a niche player in the market and may be geared up to capture manufacturing opportunities.

SBCL is predominantly a bimetal / electrical contacts manufacturer but ventured into the shunt resistor business from 2014-15. It has gained significant dominance in the domestic market and is now ready to further expand the export opportunity with capex already done and capacity in place.

Shivalik is a simultaneous play in three opportunities – switchgear industry, smart metering and EVs. It also aims to increase its revenue contribution from electrical contacts from current 10/11% by inorganic expansion and opening up of the global opportunity.


“Overall, we expect Revenue/EBITDA/PAT CAGR of 25%/29%/29% over FY24-26E, with RoCE/RoE 30.4%/24.1% in FY26E,” says a report by JM Financial.

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Additionally, SBCL has PLI (product linked incentive) in shunts and is constantly exploring newer industries for its shunt applications, which may include mobile, telecom, renewables, etc.

The report by the domestic brokerage firm also emphasized that a long-standing customer relationship is a key strength for the company. In a span of 10 years, no customers have left Shivalik.

A majority of the company's sales is customized and accordingly sets production parameters and equipment. Customers invest in the tooling kit and nearly 75% of the products are custom-made for customers.

However, on the flipside, lack of relay manufacturers in the domestic market, slow implementation of smart meter programmes and a delayed recovery of American markets have been listed as the key risks to the company's growth.

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