Olectra Greentech Ltd (“OGL” or the “Company”) is a pioneer in electric bus manufacturing and insulators in India. OGL is an ISO-9001:2008 certified company and its R & D Center is recognized by the Department of Scientific and Industrial Research, Govt. of India.
Olectra Greentech is a market leader through creative technologies and commitment to excellence. OGL is the largest manufacturer and suppliers of Composite Insulators in India. Composite Insulators are well used across the globe as a significant technology breakthrough.
In 2015, Olectra Greentech entered into a strategic alliance with BYD of China; the world’s leading manufacturer of electric vehicles, thus creating a formidable technology partnership in the EV segment.
The Company has a cooperation agreement with BYD Auto Industry Co Ltd, for assembly, manufacture, sales, marketing and aftersales service of Electric Buses in India.
Focus on Innovation
Financial Performance
| Particulars | FY17 | FY18 | FY19 | FY20 | FY21 | ||||
| Revenue (In Rs. Cr.) | 104.88 | 161.49 | 170.11 | 200.52 | 281.38 | ||||
| Growth | – | 53.98% | 5.34% | 17.88% | 40.33% | ||||
| EBITDA (In Rs. Cr.) | 20.11 | 13.91 | -15.17 | 5.04 | 20.18 | ||||
| EBITDA Margin | 19.17% | 8.61% | -8.92% | 2.51% | 7.17% | ||||
| EBIT (In Rs. Cr.) | 17.65 | 10.69 | -21.95 | -12.48 | 6.86 | ||||
| EBIT Margin | 16.83% | 6.62% | -12.90% | -6.22% | 2.44% | ||||
| PBT (In Rs. Cr.) | 13.13 | 11.89 | -22.04 | -2.06 | 10.83 | ||||
| PAT (In Rs. Cr.) | 8.42 | 8.89 | -15.81 | 13.53 | 8.08 | ||||
| PAT Margin | 8.03% | 5.50% | -9.29% | 6.75% | 2.87% | ||||
| EPS (In Rs.) | 1.03 | 1.08 | -1.93 | 1.65 | 0.98 | ||||
| EPS Growth Rate | – | 5.58% | – | – | -40.28% | ||||
| Historic P/E (Closing Price of 31st March) | 73.40 | 168.36 | – | 27.12 | 217.39 | ||||
| CURRENT P/E | 216.51 | ||||||||
| CURRENT PE/ROE | 198.48 | ||||||||
| D/E | 0.96 | 0.37 | 0.03 | 0.03 | 0.01 | ||||
| PE/ROE | 5.77 | 37.56 | – | 14.68 | 199.29 | ||||
| EV/Sales | 15.55 | 10.72 | 6.77 | 6.89 | 22.23 | ||||
| Interest Coverage | 3.51 | 2.27 | (1.01) | 0.36 | 2.69 | ||||
| ROCE | 15.47% | 5.14% | -2.09% | 0.67% | 2.69% | ||||
| ROE | 12.71% | 4.48% | -2.25% | 1.85% | 1.09% | ||||
During FY 2021, the Company has recorded sale of 88 Electric Buses against the sale of 155 Electric Buses in the Financial Year 2019-20, declined mainly due to outburst of COVID-19 which severely impacted the public transport in India. The Company has been awarded with orders for 550 Electric Buses in the Financial Year 2020-21. FY 2020 – Exceptional gain of Rs. 19.40 Cr. During the year ended March 31, 2020, the Company has sold Investment in Evey trans Private Limited to MEIL Holdings Limited.
Quarterly Performance
| Quarterly Results | Q3 FY 2021 | Q4 FY 2021 | Q1 FY 2022 | Q2 FY 2022 | Q3 FY 2022 | TTM | Q-o-Q % | Y-o-Y % |
| Revenue (In Rs. Cr.) | 61.11 | 147.88 | 42.27 | 71.43 | 208.26 | 469.84 | 191.56% | 240.79% |
| EBITDA (In Rs. Cr.) | 6.17 | 17.50 | 8.85 | 15.14 | 28.60 | 70.09 | 88.90% | 363.53% |
| EBITDA Margin | 10.10% | 11.83% | 20.94% | 21.20% | 13.73% | 14.92% | ||
| PAT (In Rs. Cr.) | 2.99 | 9.66 | 1.32 | 3.60 | 12.64 | 27.22 | 251.20% | 322.90% |
| PAT Margin | 4.89% | 6.53% | 3.12% | 5.04% | 6.07% | 5.79% | ||
| EPS (Rs.) | 0.36 | 1.18 | 0.16 | 0.44 | 1.54 | 3.32 | 250.00% | 322.80% |
INVESTMENT RATIONALE
Largest Manufacturer of Electric Buses
Olectra Greentech is the largest manufacturer of electric buses in India, with a market share of around 41%. Following are the list of top Electric Bus Manufacturers in India with their E-bus Models:
| Name of the Company | Models |
| Ashok Leyland Limited | Ashok Leyland Versa Electric Bus |
| JBM Auto Limited | JBM Ecolife Electric bus |
| Tata Motors Limited | Tata Ultra 9/9 AC electric Bus |
| Olectra Greentech Limited | Electric Bus K9 |
| Deccan Auto Limited | SKYPARK Bus |
| Eicher Motors Limited | Skyline Pro |
Electric Charging Stations are crucial for running the Busses. Olectra has developed 18 charging stations whereas 23 charging stations having average 10 chargers per station are in the process of development for which space, input power, material procurements and land development are in advanced stage.
Technological Support from BYD China For E-Bus Division Operations
The Company has a technological collaboration with BYD for procurement of e-bus battery, chassis, components, sub-assemblies and spare parts. BYD Co Ltd is a Chinese manufacturer of automobiles, buses, forklifts, lithium rechargeable batteries, trucks, etc, with its corporate headquarters in Shenzhen, China. It has presence in China, North America, South America, East Asia, Middle East and Europe. BYD has the largest fleet of 100% electric buses in the world. At present, OGL has four models of electric buses namely K-6 (7 metres), K-7 (9 metres), and K-9 (12 metres), C-9 (12 metres coach model).
Received Letter of Award for 50 e-buses
On 3rd January 2022, the Company announced that it has received a letter of award (LoA) for 50 e-buses from “one of the state transport authorities” for inter-city operations under the central government’s FAME-II scheme. These buses are to be delivered in 12 months. This order for the supply of 50 e-buses is on gross cost contract (GCC)/ OPEX model basis (i.e for Inter-city operations) is for a period of 12 years The maintenance of these buses will also be undertaken by the Olectra during the contract period. The value of this contract is about Rs 125 Cr., it added. With this, the total order book of Olectra for electric buses stands at around 1,523 e-buses after considering the deliveries already made. In its recent update, the Company’s chairman mentioned that the Company has submitted bids for tenders released for 6000 more buses and is hopeful for getting the orders for a large share of these.
In a JV with Etrio, another EV player, the Company has won an order for 5600 electric three-wheelers through state-run Convergence Energy Services Limited. The Company will be supplying about 3500 of these vehicles, which it has developed in-house.
Plan to Set up India’s Biggest Electric Bus Factory
The Company is setting up the country’s biggest electric bus factory with a capacity of 10,000 units on the outskirts of Hyderabad, as it plans to grab a larger share of cleaner mobility incentivised by the government. To be set up with an investment of more than Rs 600 crore, the new facility is spread over 150 acres. Apart from buses, Olectra Greentech will also produce electric three-wheelers and trucks — the new segments the Company is diversifying into, said a top executive. The Company will be eligible for incentives under the central government’s production-linked incentive scheme.
INVESTMENT CONCERNS
High Working Capital Intensity
OGL’s operations remain working capital intensive, as reflected in high NWC/OI of 77% as on March 31, 2021. The e-bus division accounted for 73% of the inventory as on March 31, 2021. The working capital requirements for the e-bus division are likely to increase, considering the sizeable ramp-up anticipated in the near term.
Exposure To Fluctuation in Raw Material Prices and Increasing Competition In E-Bus Industry
The profitability of OGL’s insulators division is exposed to fluctuation in raw material prices as seen in the past, given the fixed-price nature of the orders. The bus division operations are dependent on continued technology support from BYD and it faces stiff competition from players such as TML, Ashok Leyland Limited, PMI Foton, JBM Solaris, etc.
Slower ramp-up in e-bus supply leads to materially low revenues or margins.
The Company is the market leader with a share of 41% in the nascent yet growing electric bus market. The dedicated factory and new products will help it retain the lead and thwart challenges from legacy players Tata Motors and Ashok Leyland, which also offer electric vehicles. The Company has also tied up with a truck maker to develop electric trucks, which it plans to start producing next fiscal year.
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