Shivalik Bimetal Controls: Precision Engineering Drives Profitability Amidst Global Headwinds

Shivalik Bimetal Controls Limited, a key player in precision engineered materials, has demonstrated a robust financial performance for Q2 and H1 FY26, showcasing the resilience of its business model and disciplined execution of its long-term strategy. Despite a broadly stable, yet marginally contracting, volume environment, the company reported a significant 26.3% increase in Profit After Tax (PAT) for H1 FY26. This impressive bottom-line growth, even with a slight 0.9% dip in total volumes, underscores Shivalik's strategic focus on value-added products, efficient cost control, and margin expansion.

For Q2 FY26, the company's consolidated revenue from operations stood at ₹137.40 crore, marking an 8.49% year-on-year growth. Consolidated EBITDA for the quarter was ₹31.07 crore, a 16.39% increase, with the EBITDA margin expanding by 154 basis points to 22.61%. Profit Before Tax (PBT) grew by 22.40% to ₹32.18 crore, and Profit After Tax (PAT) saw a 25.13% rise to ₹24.59 crore. The PAT margin improved by 238 basis points to 17.90%. On a half-yearly basis (H1 FY26), consolidated revenue reached ₹274.00 crore (up 8.46%), EBITDA ₹63.02 crore (up 25.07%), PBT ₹62.56 crore (up 25.61%), and PAT ₹47.37 crore (up 26.42%).

Strategic Shifts and Segmental Performance

Shivalik's performance reflects a healthy combination of margin expansion and operating leverage. The gross margin improved by 296 basis points, and the consolidated EBITDA margin rose by 305 basis points year-on-year, driven by a sharp focus on pricing, product mix, and cost control. The company's strategic pivot towards higher value-added products and assemblies, moving beyond just strip-form materials, is clearly yielding results.

Regionally, Shivalik continues to see solid traction in India, with shunt sales growing 25.23% in Q2, fueled by robust demand from smart meter and industrial sectors. Across Asia, excluding India, sales climbed 38.5% as the company deepened customer engagement and expanded into new accounts. However, the Americas and Europe experienced temporary softness in shunt volumes due to timing and channel recalibration, as customers adjusted inventories and OEMs deferred orders. Management views these effects as transitory, with underlying demand remaining strong.

Here's a snapshot of Shivalik's consolidated financial performance for H1 FY26:

Driving Growth Through Innovation and Integration

Shivalik's growth journey is underpinned by several strategic initiatives aimed at enhancing its competitive edge and market reach. The company has transitioned from a single-plant bimetal specialist to a multi-site engineered-materials partner, serving over 300 marquee customers across 38 countries. Its existing asset base is capable of supporting over ₹1,300 crore in revenue, sustaining high incremental Pre-tax ROCE without significant greenfield risk.

One of the key initiatives is the pilot PCBA assembly line, which is on track to commence revenue generation from Q4 FY26. This project is anticipated to contribute ₹50-70 crore to the topline in FY27, marking a significant step in forward integration towards high-value assemblies. Furthermore, the establishment of Shivalik Bimetals Europe SRL in Italy during FY25 as a wholly-owned subsidiary enhances its global presence and direct access to European markets.

Backward integration is another critical focus, particularly in raw material indigenisation. Management expects to source 20-25% of its total raw material consumption locally within the next 3-4 months, with a target of 50% by next year. This move is projected to yield a positive impact on both material costs and the working capital cycle, bolstering supply chain resilience against global trade barriers.

The company's proprietary technologies, including Electron Beam Welding (EBW) and Diffusion Bonding, serve as a fortress of cost, quality, and technology leadership. These dual-process capabilities provide a significant competitive advantage, enabling the production of ultra-low-ohmic shunt resistors and locking OEMs into multi-year design platforms. The in-house machine build and precision strip processing further minimize scrap and ensure uniform conductivity, contributing to a sustainable cost edge and high entry barriers.

Market Opportunities and Future Outlook

Shivalik is strategically positioned to capitalize on several high-growth verticals, including electric vehicles (EVs), smart meters, and data centers. The Total Addressable Market (TAM) is expanding significantly through these trends. The EV shunt market, for instance, is projected to grow substantially, driven by subsidies and increasing adoption of Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs. The Indian Smart Meter National Programme (SMNP) targets 250 million smart meters, offering a massive domestic opportunity with localization clauses benefiting Indian manufacturers.

The surge in global data center build-out and AI-driven digitization is also catalyzing demand for power infrastructure and grid equipment, creating structural tailwinds for both bimetals (thermal protection) and shunt resistors (current sensing). The accelerated energy transition towards renewables further boosts demand for precision components in grid modernization, EVs, and energy storage systems.

Despite the current global market mutedness and the impact of tariffs, management remains optimistic about future growth. While FY26 topline growth is now expected to be in the high single-digit to low double-digit range (revised from an earlier 12-15%), the outlook for FY27 is more robust, with double-digit growth projected between 13-18%. This confidence is rooted in the successful materialization of new developments, new customer acquisitions, and the strong performance anticipated from smart meter installations and two-wheeler EV segments in India.

Conclusion: A Resilient Path Forward

Shivalik Bimetal Controls Limited's Q2 and H1 FY26 results underscore its strategic clarity and disciplined execution. By focusing on high-value-added products, leveraging proprietary technologies, and pursuing both forward and backward integration, the company is effectively navigating a challenging global environment. The emphasis on cash generation, zero-debt status, and ESG compliance further strengthens its foundation. With a robust pipeline of new projects and a clear vision for capitalizing on emerging market trends in EVs, smart meters, and data centers, Shivalik appears well-positioned for sustained growth and enhanced shareholder value in the coming years.