Exicom Tele-Systems: How this smallcap stock is charging up India’s EV ecosystem

On debut, the stock price saw a bumper listing, surging over 86% from its offer price of ₹142. In the past month, the stock has rallied more than 15%.

Let's delve into why investors are enamoured with this newly listed stock and whether the current rally has more legs.

Financial performance

In FY24, Exicom's revenue grew to ₹10.2 billion compared to ₹7.1 billion in FY23, a robust 44% increase. Meanwhile, profit shot up multi-fold, from ₹80 million reported last year to ₹660 million in FY24. During the year, the company improved its gross margins by 2% as finance costs reduced.

Segment-wise, its critical power business saw a 59% growth, while the main business—EV charging—grew 11%, from ₹2.2 billion to ₹2.4 billion. The power business has seen a steep jump over the past three years.

The company's order performance for the past year was impressive, with ₹11.1 billion booked, compared to ₹9.5 billion in FY23. Exicom launched upgraded chargers for home use, spin air, and Gen 1.5 Harmony DC chargers for fast charging, which are noted as India's fastest DC chargers, engineered to make EV charging effortless.

Expansion plans

Exicom stands out as one of the few companies in India offering a comprehensive portfolio of AC and DC chargers, ranging from 3.3kW to 360kW. With a pan-India after-sales service, the company has successfully deployed over 35,000 EV chargers across 400 locations in India.

The company is currently investing in R&D for next-generation chargers and power conversion equipment. It’s also developing an integrated manufacturing complex in Hyderabad for all product lines, planning a capacity increase from 42k AC chargers to 180k AC chargers in two phases.

While the EV market has been expanding in recent years, the growth has been slow. High upfront costs of EVs, primarily due to expensive batteries that constitute 35-40% of the vehicle price, and the lack of robust EV charging infrastructure, are major deterrents. Despite India's 12,000 charging stations being a 19x increase over 650 in 2019, it pales in comparison to China's over 800,000 EV charging outlets.

India is projected to require more than 63,000 charging stations and cumulative investments of ₹269 billion over the next five years. The demand could surge to 0.23 million charging stations, requiring a total investment of ₹1 trillion by 2032. This anticipated growth underscores the vast potential of the sector and presents a significant opportunity for Exicom, a market leader in EV residential chargers with a 25% market share in public chargers.

Charging ahead into new markets

With a broad customer base in India, Exicom aims to leverage its track record to attract new customers globally. The company seeks to broaden its customer reach across different regions, including overseas markets in the EV charger business, capitalizing on the increasing adoption of EVs in Southeast Asia and Europe. To support this expansion, they are establishing local sales and distribution networks in these regions and obtaining necessary global and local country certifications.

Exicom is also targeting new customer bases for its existing products. For instance, Li-ion battery solutions, initially designed for telecommunications, are now being customized for data centres and home energy storage. Additionally, their modular AC-DC power converters (rectifiers), historically used in telecommunications networks, are being adapted for powering battery swapping stations and 2W/3W portable chargers.

Moving forward, Exicom's primary focus remains on enhancing its EV charger portfolio to meet evolving customer expectations both domestically and globally. The company has outlined a capex plan to establish two production/assembly lines to meet the growing demand for EVs in India. The first line will focus on EV charger and critical power production/assembly, while the second will be dedicated to prismatic production/assembly for Li-ion batteries.

Share price performance

In the past month, shares of the company have increased by 15%. Since listing, the stock price is up by 42%.

Exicom has a 52-week high of ₹347, touched on 31 May 2024, and a 52-week low of ₹170, touched on 13 March 2024.

Here’s a table comparing Exicom with its peers:

In conclusion

Exicom Tele-Systems presents a compelling opportunity for investors seeking exposure to the burgeoning electric vehicle and critical power solutions markets. The company's well-established presence, strong track record, and diversified product portfolio position it to capitalize on significant growth opportunities in both segments.

However, despite the positive outlook, investors must conduct their own research before investing in any stock and ensure it aligns with their long-term goals and investment temperament. Successful investing requires thorough analysis and prudent decision-making.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com