Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
Axiscades Technologies Limited
Key Investment thesis –> Company focus on Aerospace, Defense, Semiconductor, Electronic system verticals and gearing up for FY26, FY27
Business
AXISCADES is a leading, end to end technology and engineering solutions provider aiding creation of innovative, sustainable and safer products worldwide. AXISCADES is headquartered in Bangalore with subsidiaries in USA, UK, Canada, Germany, India and China; and offices in Germany, France, Denmark, USA and Canada. AXISCADES has a diverse team of over 3,100 professionals working across 20 locations across North America, Europe, UK and Asia-Pacific, striving to reduce the program risk and time to market.
The company offers Product Engineering Solutions across Embedded Software and Hardware, Digitization and Automation, Mechanical Engineering, System Integration, Test Solutions, Manufacturing Engineering, Technical Publications, and Aftermarket Solutions. The solutions comprehensive portfolio covers the complete product development lifecycle from concept evaluation to manufacturing support and certification for Fortune 500 Companies in the Aerospace, Defense, Heavy Engineering, Automotive, Energy and Semiconductor industries.
Company Portfolio
Current serving Major Industries
Aerospace
Heavy Engineering
Products engineering
Products and Solutions for Defense
AIP and Energy
Semiconductors
Awards
Received 3rd consecutive Diamond supplier award from Bombardier for 2022. This recognition is a testament to our unwavering commitment to excellence, innovation, and delivering with the highest standards of quality.
Opportunities :
Unique positioning with deep domain capabilities ranging across competencies, with respect to – Electronics Products, Engineering Services and Defence
Growth driven by leveraging Digital ER&D and Defence
ER&D Services – A large and underpenetrated market with a Global TAM of ~$1 Tn
Strong Defence-Tech Play with leadership in Radar, Sonar and Electronic Warfare systems
Revenue Breakup
FY24 revenue breakup
Q1Fy25 revenues breakup
Q2Fy25 revenues breakup
Fundamental Ratios, Cash, EBITDA, PAT, SHP
Stable OPM, Stable tax, Quarterly YOY growth in sales and PAT, Borrowing reducing
DE ~0.4 , Free cash flow is good , Pledge is Nil, ROCE < 15 and ROE<10%
Promoter has sufficient skin in game, Cash flows are good, Cash conversion cycle is elongated
Triggers
Macro Trends :
Recent Triggers in last 1 year or so
Appointment of Chairman Mr. Abidali
Appointed Mr. Abidali Neemuchwala as Chairman of the Board and Non-Executive Director at AXISCADES. With a distinguished career spanning over three decades in the technology industry, he has earned enviable reputation for his expertise in aligning organizations, driving business results, and consistently leading transformational initiatives.
Strategic partnerships and Opening Engineering design center
Signed a strategic partnership with with Cantier, a Singapore-based powerhouse in Manufacturing Execution Systems (MES), with a specialization in Industry 4.0 integration to create a synergy that promises to elevate precision, efficiency, and innovation in the manufacturing sector.
Inaugurated Engineering Design Centre in Saltney, UK to serve the long-term requirements of the Aerospace Industry and various promising opportunities in the region.
Signed a strategic partnership with KANZEN Institute Asia-Pacific Pvt Ltd (KIAP), for new age Industry IIoT, Digital Automation and MES 4.0 implementation for delivering enhanced value to our Global customers.
Mergers and Acquisitionsand QIP
Completed the acquisition of add solution GmbH which will strengthen our service offerings and bring opportunities to deliver enhanced value to our combined global client base. . This will provide us with a strategic foothold in the automotive space, with significant offshoring opportunities and access to marquee global automotive OEMs.
The board has also approved the acquisition of EPCOGEN., a niche service provider in Energy space, specializing in engineering design and solutions. This proposed acquisition will strengthen our presence in energy vertical, provide access to Middle East and North American Energy markets
QIP in Jan2024 at 657Rs/share — The Company successfully concluded the Equity Raise of INR 220 Crores in January 2024, with marquee Institutional Investors subscribing to the issue. This will strengthen the balance sheet and improve profitability, Reduction in Net Borrowings by 60% from INR 214 crores to INR 85 crores, which will significantly reduce Finance Cost
Deal Wins
Deal win with Aerospace OEM with TCV of $ 18 Mn in the areas of in-service repair and manufacturing support
Design and prototype wins in several defense programs, such as HISAR, next generation ERP for combat aircrafts, Intel based SBC, DEAL satellite terminal design, DF for Naval program, adding to the production order pipeline
Digital Team ramped to 75+ FTEs with deep competencies in automation, AI/ML and robotics, with complete digital project execution capabilities
Acquisition of add-solutions GmbH and EPCOGEN, opens new vistas in Automotive and Energy Space, adding strategic logos and competencies
Q4FY24 updates
Revenue from new customer logos grows to Rs.69 crores, a growth of 5 Times over the previous year
Deal win with Aerospace OEM with TCV of $ 18 Mn in the areas of in-service repair and manufacturing support
Defense Production Revenues in Mistral triples from Rs.39 crores to Rs.112 crores, with Rs.272 crores in executable production orders
Commencement of delayed delivery of Man Portable Counter Drone System (MPCDS) to the Indian Army, with significant addressable
market in Indian Defense and Global Markets
Design and prototype wins in several defense programs, such as HISAR, next generation ERP for combat aircrafts, Intel based SBC, DEAL satellite terminal design, DF for Naval program, adding to the production order pipeline
Digital Team ramped to 75+ FTEs with deep competencies in automation, AI/ML and robotics, with complete digital project execution capabilities
Advanced level discussions with leading helicopter manufacturer for engineering and design support
New opportunities in counter drone system over next 5 years are highly promising with addressable market more than INR 3,000 Cr. 40 Nos of one of a kind Man Portable Counter Drone System (MPCDS) cleared for dispatch to the Indian Army. Balance 60 Nos under production.
Onboarded world’s largest phone and consumer electronic manufacturer as a customer with clear glide path on engagements into FY25
Order book at 30th Ap24 — 749Cr
Q1FY25 updates
Mistral Solutions received order of ₹90 crores from BEL for supplying Radar Processing Systems
Ramp up in aerospace with European OEM focused on production and plant migration efforts
Ramp up in high end cybersecurity solutioning with UK automotive manufacturer.
Onboarded an EPC major from Middle East as our customer with long term contract
Completed second tranche of delivery of Man Portable Counter Drone System (MPCDS) to the Indian Army
Expenses hit in past Q3/Q4 Fy24
Increase in finance cost due to debt funding for Mistral acquisition . In Q2 FY24, the material cost has increased due to increase in production orders in Mistral and increase in employee expenses on account of annual increments and investments in building competencies in Embedded and Digital for future growth
Q2FY25 Update
Defence revenues grew by a healthy 73% QoQ, with Defence production revenues surging by 84% QoQ, bolstered by a significant order backlog set for execution in fiscal years 2025 & 2026. With a healthy pipeline and focused approach, over the next 12-18 months, we aim the defence revenue to reach around 60% of the overall company’s revenue
Management commentary With latest focus areas
Unmanned combat, we are having anti-drone, drones, and drone controllers
Foreign OEMs, we have a three-pronged, that is, weapon package, submarine, and avionics. preferred offset partner for the weapon system, weapon package
new programs, all our missile programs, one is the largest missile program in India, another is an upgrade of the existing missile program, another is ground system for key programs
Product focus : particular product direct RF. Then there is, of course, our product X-band radar, which is primarily used in the submarine and marine systems.
Airbus, we have major programs running in India. C295, MRTT, Multi Role Transportation Tanker, which is going to be 330 based, And AVEX, of course, 319 based.
Tying with AgniKul, having an MOU with them, and approaching the ISRO, ISRO and other space agencies for two major things, NGLV, New Generation Launch Vehicle, and Bharatiya Space Station. So we want to add value to them significantly, and there could be opportunities in 3D additive manufacturing, and designing of certain subsystem blocks, etcetera. Then there is also chances for electronics-based algorithms and advanced systems, and for the guidance and navigation, that product we’ll be able to make. The third one is AI-based anomaly detection in the launching
Capturing some discussions from Dec24 confcall
C2P strategy, that is, chip to product. That is Mistral’s non-defense activity, or our group’s non-defense activity., we are shifting the center of gravity of C2P to US. Basically it will be driven out of US. We’ll have a small team there and driving the offshore team here. That’s the strategy
We are a very, very good RF in RF. We consider we are among the best in India for RF. RF and RF activities. Second is probably we are one of the best in handling mixed signals. We can handle analog, digital, RF, everything together. That is one of our forte. Third is sensor fusion. We can handle multiple sensor. Sensor fusion comes very, very handy when you deal with multiple sensor in a new AI environment, in new robotics or auto-driven and those kinds of things. We are extremely good in both. Then we are very good in ruggedization. We are especially because we are very defense focused. We can ruggedize any product and do that. And finally that we are very good in the chip, chip level, post-silicon, whatever it is, validation, verification, and take the chip to the product and then product to the customers
Continuous Hiring of Talent
Orders winning, Expansion in Middle east and Outlook for different segments by Management
Added this latest development on 17Jun25
INDRA SIGNS AGREEMENT WITH AXISCADES TO BOOST PRODUCTION OF CUTTING-EDGE SYSTEMS IN INDIA
Indra, a European-based global leader in defense, aerospace, and strategic systems, and AXISCADES a prominent technology solutions provider in defense, aerospace and strategic electronics, are proud to announce a strategic alliance.
Indra is keen to acquire defense-related products and services from AXISCADES, which will be delivered through AXISCADES’ comprehensive design, development, production, and supply chain center.
Both companies are actively exploring joint product development for the Indian and global markets, potentially adapting existing Indra products or creating new ones specifically tailored to meet customer needs.
TechnicalChart
Technical chart on 15-dec24
Technical chart on 29-dec24
Risks
Highly competitive industry
Acquisitions dont play out as anticipated
Customer concentration risk – On a consolidated basis, ~26% of ACTL’s revenues in FY23 were from its top two clients (35% in FY22).
Slowdown in Europe impacting automotive revenues
Heavy Engineering vertical remains a drag for few more qtrs although optimization work going on
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
Aeroflex Industries
Key Investment thesis –> Increasing Demand of HVAC system, Large Scale Industrialization, Modernization in Agriculture and Demand from new edge industries like Aerospace, Satellite, Solar and Robotics
Company is one of the leading Indian manufacturers of metallic flexible flow solutions made with stainless steel used for controlled flow of all forms of substances including Solid, Liquid, and Gas. Incorporated in 1993, co. is part of Sat Industries Limited.
Product Profile: Braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes, expansion bellows, compensators, and related end fittings.
Exports to 89 countries across Asia, Americas, Europe and Africa, through a diversified go-tomarket model
Scalable and Customized flexible flow solution products
Current serving Major Industries
Steel & Metal
Oil & Gas
Chemicals
Sea Port Terminal Handling
Paper & Pulp
Pharmaceutical
Strengths :
Extensive Promoter experience
Employee strength -500+
The company has 2500+ SKUs
Strategically Located Near JNPT Port
80+ machine lines
72+ Products across various stages of Research and Development
14 Qualified R&D Team
NABL Accredited Lab
ISO 9001:2015, ISO 45001:2018 and ISO 14001:2015 certified;
Adherence to global standards
Revenue Breakup
Fundamental Ratios, Cash, EBITDA, PAT
ROCE asnd ROE> 20%, DE ~Nil , Free cash flow is good , Pledge is Nil
Stable OPM, Net Profit went 8X+
Promoter has skin in game + Big Shark Ashish Kacholia holding 3.6%
Triggers
Macro Trends :
▪ Global market for SS flexible hose has grown at a CAGR of 8.2% to value at approximately USD 3.3 Bn in 2022 ▪ Traditionally, the demand for Flexible Flow Solutions made with Stainless Steel Corrugation was largely driven by the industrial sector – manufacturing plants and manufacturing products from chemicals to paper ▪ Between FY’18-9M FY23, over 1,840 projects (brownfield and greenfield) were completed in the manufacturing ▪ With Flexible Flow Solutions made with Stainless Steel Corrugation application being universal, this large base is believed to have supported a strong demand for the product ▪ Given the increasing preference for Flexible Flow Solutions made with Stainless Steel Corrugation in place of rubber / PTFE / polymer hoses, the demand for the former from the industrial sector would be stable
Company has worked on Capacity Expansion, value added products
Expanding our presence to:
Electric Mobility
Fire Sprinklers
Solar
Robotics
Semiconductors
Aerospace and Satellite
Management commentary in Q1Fy25 results
Increasing margins possibilities, Increasing orders from assemblies, Focus on value added offerings, possible inorganic Way of expansion, Acquisition
Technicals
Technical chart on 8th Sep24
Risks
PE is bit high in short term
Large working capital requirement, cash conversion cycle is bit high
Exposure to volatile raw material price
Acquisitions dont play as anticipated
Demand dont originate as anticipated
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
Servotech Power
Key Investment thesis –> Developing EV charging Infra and Delivering Solar Rooftop solutions across India. Key Business wins for EV charging Infra, Association with key businesses B2B
SPSL is in the business of high-end solar products and EV chargers. It develops ultra -fast DC chargers and Home AC chargers, and has installed over 2400 EV chargers in collaboration with oil marketing companies
Product Profile: a) EV Charger: Electric Vehicle Charging Station, AC Charger, DC Charger b) Solar Products: Solar Inverter, Solar Panels, Solar Batteries, ServPort, SMU c) Power & Backup: Battery, Servo Stabilizer, etc. d) LEDs: Domestic LED, Commercial LED e) Oxygen Concentrator: Oxygen Concentrator 5L and Oxygen Concentrator 10L f) UVC: UV-C Handheld Disinfection Lamp – 6W, Portable UV-C Disinfection Lamp – 36W (Sensor Equipped), Portable UV-C Disinfection Lamp – 38W, UV-C Disinfection RoboTruk – 150W, UV-C Sterilization Bag, UV-C LED Sterilization Box with 10W Wifi Charger, UV Sterilization Box with Charger, UV-C Car Intelligent Sanitizer, Car Air Sanitizer, UV Air Purifier, FAR UV-C Digital Sanitizer
Covered the thesis here in quick 12 min Video
Well-equipped 2 manufacturing facilities spanning over 80,000 sq. ft. and 1,44,000 sq. ft. respectively in Sonipat, Haryana
Capacity to manufacture 30,000 AC EV Chargers and 12,000 DC EV chargers annually
The company is majorly into B2B operations and having Marquee clientele comprising of BPCL, IOCL, HPCL, Nayara Energy, UPNEDA and others
Employee strength -500+
Revenue Breakup
Range of EV AC AND DC chargers
DC chargers have amazing features on fast port, advanced connectivity and user friendliness
Range of Solar solutions
Solar panels, Solar Inverters, Solar Batteries
ESS : Energy storage system (Major tailwinds may appear here)
Solar Street light (too much commodity)
Solar charge controller
EV CHARGER Components
Another interesting solution is Servport
Fundamental Ratios, Cash, EBITDA, PAT
ROCE and ROE > 10%, Pledging 0%, Debt to equity under control
High TTM PE and PB ratio
12X Sales and 12X PAT in 10 Years, Stable EBITDA numbers, Improving NPM
Promoter has good skin in game at ~60% shareholding, FII holding 5% approx
Cash conversion cycle have improved in recent years
Triggers
Macro Trends :
Developing EV charging Infra and Solar Rooftop solutions Infra across India
Journey and recent forays
Government subsidies & policies promoting local manufacturing of EV Components and sustainable energy resources
Growing need for carbon neutral has increased the demand forsustainable energy solution
Increasing demand for EV charging stations with healthy traction in order pipeline in addition to a sizable order backlog. Govt. allocate subsidies of INR 800 Cr to set up 22,000 fast chargers at various fuel pumps across India. The government has sanctioned 2,877 such charging stations across 68 cities in 25 states and UTs. In addition, 1,576 charging stations on nine expressways and 16 highways have also been sanctioned.
Projections indicate that fast-charging stations will witness a CAGR of over 40% by 2025.
New additions in budget 2024 like Pumped Storage Policy and exemption of customs duty on lithium will incentivize renewable energy integration and adoption
Rising urbanization and awareness of climate change have led to increase in demand for cost-efficient products
PM Suryodaya Yojana to solarize 1 Cr Households. 50 solar parks with an aggregate capacity of 37.49 GW have been approved in India
Company has worked on Capacity Expansion
Preferential shares allotment and warrants issued at 83 Rs (approx raised 74cr)
Backward integration efforts for key components (control set and power module) are on track, with the control set already being manufactured in India.
Solar Segment:
Regular monthly sales of ₹8-10 crores in the solar segment, targeting a total of ₹100-150 crores annually.
Plans to expand presence in 20-21 states within two months to leverage government schemes for household electricity.
International Expansion:
Export business is expected to grow, with previous year’s revenue at approximately ₹40 crores and positive momentum for future exports.
Attending international exhibitions and establishing a dedicated export team.
Patents; Innovation and Leadership
51% Growth in the Dealer & Distributor Network
Hired 128+ employees in Q1
Coninuous order wins from Major OEM’s —Current order book stands at approximately 8,000-8,500 pieces of DC chargers, indicating strong demand.
Order win from BPCL worth ₹120 Crs for the supply of 1,800 DC EV chargers
Order win from IOCL and other EV Charger OEM’s worth ₹111 Crs for the supply of 1,400 DC EV chargers
Order win from BPCL for the supply of 2,649 AC EV chargers
Order win from HPCL and other EV charger OEM’s worth ₹102 Crs for the supply of 1,500 DC EV chargers
Signed a contract with Adani Total Energies E-Mobility Ltd. (ATEL) for the supply of AC EV chargers
SPSL will be responsible for manufacturing, supplying and Installing AC EV Chargers at different Airports and other said locations
Collaborated with an international company to enhance its in-house components manufacturing.
SPSL will be constructing a cutting-edge manufacturing facility focused on the production of Power Modules, Control Circuits, and PLCs. The new plant will have an initial annual production capacity of 24,000 power modules & will ramp up its production capacity to 2.4 lakh power modules annually
Solar energy storage
Servotech Secures Order of around 1.2 MW Solar Energy Storage and Grid Connected Systems from Rural Development Department and UPNEDA. Servotech will be responsible for installing multiple 75kW solar-based energy storage systems, designed to provide reliable and uninterrupted power supply across Uttar Pradesh. Additionally, the company will also be designing, manufacturing, supplying, erecting, testing and commissioning 20 kW and 40 kW grid-connected solar power systems, contributing to the state’s renewable energy goals. This order will prove to be essential for overcoming geographical and infrastructural challenges in areas of Uttar Pradesh by enabling a broader reach of sustainable energy solutions and ensuring the penetration of renewable energy into the grid.
Creating new subsidiary “Servotech Sports and Entertainment Pvt. Ltd.”
Servotech aims to capitalize on the sporting fervor, its immense popularity, and global appeal to strengthen its brand presence and connect with a wider audience base. This strategic alignment presents an exciting opportunity for Servotech to extend its reach beyond its industry boundaries and tap into new avenues of success and engagement, establishing itself as not just a leader in the EV charging and solar energy sectors, but also as a prominent player in the sports industry.
Technicals
Technical chart on 21st Aug24
Risks
Consistent Equity dilution, consistent increase in borrowing and Negative cash flows poses risk to company business growth
PE is high and any 2 bad qtrs can screw the returns profile from the current levels
Large capital working requirements is another thing to watch out for
Highly competitive industry both in Solar and EV industry
Delay in projects due to Govt policies or Land acquisition issues
Components import is another risk
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
ALPHA AFFAIRS 