Servotech ends FY26 with its strongest listed quarter

Servotech Renewable Power System Limited closed Q4 FY26 with what management described as its strongest quarter as a listed company. On a standalone basis, revenue for Q4 FY26 was INR 211.20 crore, up 66.64% year on year, while EBITDA rose 70.16% to INR 23.19 crore. PAT increased 49.50% to INR 11.73 crore. The company emphasized that the story is not limited to one quarter. It highlighted H2 FY26 standalone revenue of INR 411 crore and an H2 EBITDA margin of 12%, which it called the highest in its listed history.

For the full year, standalone revenue rose 8.92% to INR 641.66 crore. EBITDA increased 26.54% to INR 74.19 crore, with EBITDA margin expanding to 11.56% from 9.95% in FY25. PAT grew 8.34% to INR 36.26 crore. Management explained that PAT growth lagged EBITDA because FY26 included the commissioning of new capacity, which lifted depreciation and finance costs.

On a consolidated basis, FY26 revenue was broadly flat at INR 675.36 crore compared to INR 676.80 crore in FY25. Management attributed this to a deliberate scale-down of low-margin trading activity in its medical equipment subsidiary, ReBreathe Medical Devices. It stated ReBreathe revenue reduced from INR 98 crore in FY25 to INR 32 crore in FY26, as capital was refocused on higher-margin core renewable and EV businesses.

Capacity build-out and mix shift were central themes

Management positioned FY26 as a year of capability building. It stated that new manufacturing capacities were commissioned for solar inverters (hybrid and grid-tied models), DC fast chargers in the 120 to 360 kW range, battery energy storage systems (BESS), and lithium-ion battery packs. The concall referenced total FY26 CapEx of INR 64 crore and stated that the CapEx program is now substantially complete. Management indicated FY27 CapEx should moderate and be funded through internal accruals.

The company also linked its margin trajectory to a product mix shift. Management said the move toward solar inverters, higher-capacity DC chargers, and BESS has been a structural driver of margin expansion, describing it as a multi-year effect rather than a one-off benefit.

Revenue mix snapshot from management commentary

In the Q&A, management provided a product-wise revenue share for the business, while clarifying it has not started giving a robust product-level margin split.

Working capital moved sharply and is the main FY27 execution focus

The clearest risk point discussed in the concall was working capital. Management stated standalone borrowings increased from INR 75 crore to INR 196 crore during the year, while trade receivables increased from INR 155 crore to INR 243 crore. It also said operating cash flow was negative for FY26.

Management explained the movements using three factors. First, incremental debt funded CapEx and asset purchases, including investment in a solar PV manufacturing company, and was described as invested capital rather than consumed working capital. Second, receivables rose due to specific items: around INR 40 crore stuck with oil marketing companies (IOCL, BPCL, HPCL) due to infrastructure-related payment delays, and around INR 60 crore related to railway projects that were work-in-progress as of 31 March, where payment terms include 60% against delivery and 40% against commissioning. Third, the company stated that government EPC projects structurally lengthen the working capital cycle due to milestone billing, retention money, and bank guarantee requirements.

For FY27, management stated priorities include operational consolidation, working capital normalisation, and disciplined capital allocation. It also stated there is no plan for fresh long-term debt in FY27, and indicated a target of bringing working capital days down toward 60 to 70 days.

Distribution-led growth is being used as a cash-cycle lever

A major operational highlight in the presentation was the scale-up of the channel network and retail sales. The company disclosed a distribution footprint of 600-plus distributors and 6,000-plus retailers across 370-plus towns. It also stated retail channel run-rate rose from INR 2 crore per month in FY22 to about INR 25 crore per month by FY26.

In the concall, management linked this expansion to working capital efficiency. It explained that turnkey government projects typically require manufacturing, delivery, installation, commissioning, and then collections, which can lengthen cash conversion. In contrast, distributor-led sales were described as shorter-cycle, with the distributor paying upon receiving goods and the inventory turnover embedded in the cycle.

Key developments: tenders, patents and new products

The presentation cited a strong position in institutional DC fast charger tenders, stating the company secured approximately 67% share in FY26 PSU and oil marketing company DC fast charger tenders. It also referenced a joint patent for a low-voltage EV charging device and highlighted product launches in the e-rickshaw segment, including the SULTAN battery and a charger (Jest/ZEST referenced across the materials). Management stated that OEM approvals and ICAT-related integration can be time-consuming for battery products, but it indicated the segment has already started contributing, with about a 1% impact on full-year revenue mentioned in the Q&A.

Takeaways

Servotech’s FY26 results show a clear divergence between operating momentum and cash conversion. On one hand, the company delivered record quarterly performance, expanded EBITDA margin to a listed-high level, and commissioned new capacity across inverters, high-capacity chargers, BESS, and lithium-ion packs. On the other hand, receivables and borrowings increased materially, and management acknowledged negative operating cash flow.

FY27, as framed by management, is about translating the new capacity and product mix into sustained operating leverage while normalising working capital. Investors will likely track receivable collections, the pace of commissioning-linked inflows in railway projects, and whether the channel mix increases as planned.