Bempedoic Acid, contract renewals, R&D expansion, and more. What's next for Morepen Labs?
Sushil Suri, Chairman & MD of Morepen Labs, discusses the company's roadmap in conversation with @sharad9dubey.
I see too many tags on PEAD stocks.
In this macro and market setup, short-term PEAD is not working well. If you are still playing that game, please stop until oil prices and bond yields stabilize.
Either invest with a long-term view or, if you still want to play PEAD, focus on stocks where price action remains strong even after a 10%+ rally.
Ather and Piramal Pharma are recent examples.
Sustained price strength after a sharp rally is often a sign of institutional accumulation. A one-day spike means little.
Reg STLTECH I see smart accumulation in last 30 mins ..
#GreavesCotton
Understanding Business, Q1FY27 Update and expectations for FY27 & FY28
Greaves Cotton is a diversified engineering company transitioning from a traditional diesel engine manufacturer into a modern provider of electric mobility, clean energy, and industrial solutions.
Historically, the company made its money by building single-cylinder diesel engines for the three-wheeler autorickshaws you see on Indian roads. The major strategic shift happening right now is a transition away from fossil-fuel engines toward two future-facing growth pillars: Electric Vehicles (EVs) under the Ampere brand and high-margin, niche industrial engineering components.
Its current business model follows a "Core + Investee" dual-engine approach:
The Core Engine: Generates high cash flows by selling diesel/CNG engines, power generator sets (gensets), and engineered parts to industrial vehicle manufacturers (OEMs).
The Investee Engine: Reinvests those steady cash flows into high-growth, future-ready retail verticals, specifically Electric Vehicles (EVs) and specialized EV retail financing.
1. Product Portfolio
Mobility Solutions: 3-wheeler auto engines (Diesel/CNG), Euro V+ compliant export engines, and heavy-duty push-pull control cables.
Electric Mobility (GEML): Electric 2-wheelers (under the Ampere brand like Magnus Neo and Reo VYB) and Electric 3-wheelers.
Energy Solutions: Industrial power generator sets (Gensets) and clean tech pilots like Battery Energy Storage Systems (BESS).
Industrial Solutions: Specialised equipment for the Marine, Defence, and Agriculture sectors (e.g., farm tillers, pumps).
2. Key Clients
Automotive OEMs: Major Indian and global commercial vehicle makers (e.g., Tata Motors, Mahindra, Piaggio, and Caterpillar UK).
B2B & Government: Indian Defence agencies, infrastructure companies, and agricultural retail chains.
B2C Mass Market: Everyday retail consumers purchasing Ampere electric scooters
Current Financial Impact and Reasons for Q1 FY27
This transition is currently creating a stark divide on the financial statements: top-line explosion paired with short-term profitability pressure.
In Q1 FY27, consolidated revenue surged 31% YoY to ₹974 crore, demonstrating that the shift is successfully unlocking new demand. However, consolidated EBITDA was squeezed to ₹56 crore and profitability dropped.
The two primary reasons for this Q1 margin compression were:
Input Material Inflation: A sharp global spike in raw material and commodity prices.
Upfront Growth Investments: Aggressive spending on marketing campaigns and brand building to establish their new EV models in a highly competitive retail market.
Future Expectations:
Greaves Cotton reveals a significant gap between public perception and structural reality:
➡️ Value Trigger 1: Sales Growth (Volume, Price, and Mix)
The market views Greaves as an old-school automotive diesel engine business under structural threat from electrification.
FY27 & FY28 Impact: Q1 FY27 showed a 31% top-line explosion, proving the sales mix is turning rapidly away from legacy single-cylinder diesel engines. Growth will be further sustained by geographic expansion via the newly established Dubai subsidiary.
🚨 Unpriced Expectations : The market is currently valuing Greaves as a slow, cyclical engineering proxy. The unpriced reality is the velocity of its EV volume scaling. Outpacing the broader Indian EV industry's growth (101% vs 75%) indicates that Ampere is aggressively snatching market share. This rapid mix shift toward non-engine segments creates a higher structural growth profile than currently embedded in the stock price.
➡️ Value Trigger 2: Operating Profit Margin (Operating Leverage and Cost Efficiencies)
FY27 & FY28 Impact: Margins currently look weak due to transient commodity spikes. However, as EV volumes achieve critical scale in FY28, the segment will cross its cash-breakeven point, eliminating the current quarterly loss drag. Concurrently, the newly acquired Excel Controlinkage operates at a highly profitable 25%+ EBITDA margin floor, which will fully consolidate into Greaves.
🚨 Unpriced Expectations : The market has severely penalized the stock for transient Q1 margin compression, mistaking an upfront capacity/branding investment for permanent structural damage. Because the market models sequential margin trends linearly, it has not priced in the massive step-up in profitability coming from the 100% full acquisition of the high-margin Excel business alongside the dramatic dilution of fixed overhead costs as the EV ecosystem achieves operating leverage.
➡️ Value Trigger 3: Investment Efficiency (Capital Intensity and Asset Turn)
FY27 & FY28 Impact: Greaves took a major capital allocation step by injecting over ₹380 crore across its EV and retail financing arms. In FY28, capital deployment transitions from "heavy investment" to "harvesting asset turn." Because the factory capacities for the core business and EV lines are already built, incremental asset turn will scale rapidly without necessitating large, cash-degrading CapEx.
🚨 Unpriced Expectations : The market acts under the assumption that EV ventures require endless cash burn. They are missing the fact that Greaves Cotton remains entirely debt-free with a fortress balance sheet. The unpriced expectation is its transition to a capital-light, cash-generative vehicle that funds growth entirely via internal accruals, capturing high Free Cash Flow (FCF) earlier than its heavily-indebted, venture-capital-backed peers.
💡 The Investor Opportunity
Greaves Cotton presents a classic asymmetric expectations gap. The market has fully priced in the threats facing its legacy diesel engine segment, but it has drastically underpriced the rapid volume growth of its EV platform and the immediate margin boost from the full acquisition of Excel Controlinkage.
A fundamental profit revival for Greaves Cotton might materialize in FY28, not FY27. While FY27 remains an investment phase weighed down by commodity cost-lag pressures and ongoing EV cash burn, the outlook improves for next year. By FY28, the core EV segment is projected to achieve cash-breakeven status and full consolidation of the high-margin Excel acquisition will kick in, driving significant operating leverage and structural margin expansion.
[Not investment advice, DYOR]