🟢 At a Glance
Evans Electric Ltd is a BSE-SME listed microcap involved in electro-mechanical repairs of large industrial motors, generators, and transformers. With a 125% 3-year stock CAGR, 50%+ profit growth, 33% ROE, and nearly 45% ROCE, this ₹128 Cr company has quietly become a heavyweight in the heavy machinery servicing game. But with a high working capital cycle and no moat, can this electric dream sustain?
1. 🔌 Introduction with Hook
Imagine a small repair shop that decided, “Screw it, let’s fix India’s biggest machines.”
That’s Evans Electric — a 70-year-old company that went from motor rewinding to rewiring its entire business.
🧠 Now it’s pulling off:
- 44.9% ROCE ⚡
- 125% 3Y stock CAGR 📈
- 50% 5Y profit CAGR 🔥
All this while staying debt-free, growing organically, and without a single PE fund party invite. Respect.
But beneath this bhaukal lies a question — is the story scalable, or are we one motor short of a burnout?
2. 🏭 Business Model – WTF Do They Even Do?
Evans Electric operates in the electro-mechanical service space — a boring-sounding but critical industrial vertical.
They:
- Repair, rewind & refurbish heavy-duty motors, generators & transformers
- Provide import substitution for expensive foreign components
- Execute on-site overhauls of turbo generators, DC motor armatures, etc.
- Manufacture custom parts for legacy machines with no OEM support
They’re not building new machines. They’re the ICU for industrial equipment — reviving dying giants in steel, power, cement, and infra.
Think of them as the Dr. House of industrial electrics. Not sexy. But damn good at saving lives.
3. 💰 Financials Overview – Profit, Margins, ROE, Growth
Here’s why this stock is quietly on fire:
| Metric | Value |
|---|---|
| Sales (FY25) | ₹25.5 Cr |
| PAT (FY25) | ₹7.6 Cr |
| 5Y Profit CAGR | 50% |
| 5Y Sales CAGR | 28% |
| ROCE | 44.9% |
| ROE | 33.1% |
| Operating Margins | 37.5% (elite!) |
Key Takeaways:
- Margin expansion from ~10% (FY21) to 37.5% (FY25) 🔥
- Net profit 7.3x in 3 years
- No dilution during the rise
- No gimmicky other income pumping up PAT
This is small-cap alpha with real numbers.
4. 🧮 Valuation – Is It Cheap, Meh, or Crack?
- P/E: 16.9x (FY25 trailing)
- Market Cap: ₹128 Cr
- Price/BV: 4.9x
Given:
- Steady growth
- Clean balance sheet
- 30–40% ROCE/ROE
- ~₹13.8 EPS
A fair value range can be pegged using 18–24x earnings:
FV = ₹248 to ₹331 per share
(Using FY25 EPS of ₹13.79 × 18–24x)
So at ₹234, it’s not frothy, but not a steal either. Reasonably valued for now.
5. 🔍 What’s Cooking – News, Triggers, Drama
- 🔁 Leadership change:
MD Nelson Fernandes retired; Rajesh Dhekane appointed CEO (June 2025)
→ Could drive next-gen growth or bring strategic shift - 🧾 ICICI credit line approved (June 2025)
→ Indicates scaling plans or working capital buffer - 🛠️ Sitework in progress for large turbo generator & DC motor armature
→ High-value execution in motion - 📣 Actively exploring high-tech, high-ticket contracts via marketing partnerships
Could be prepping for scale or niche verticalization.
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
- Zero long-term debt ✔️
- Reserves: ₹20.77 Cr
- Equity: ₹5.48 Cr
- Borrowings: Nil (FY25)
- Assets: ₹35 Cr
This is what a healthy microcap looks like — no leverage, lean, and high reserve build-up from actual earnings.
Only concern? Other liabilities and working capital cycles ballooning.
7. 💸 Cash Flow – Sab Number Game Hai
- FY25 CFO: Just ₹0.7 Cr 😬
- Capex (Investing): -₹1.84 Cr
- Free Cash Flow: Negative
The working capital demon is real:
- Debtor Days: 155+
- Inventory Days: 114+
- Working Capital Days: 139+
So while PAT is growing, cash isn’t sticky.
Evans Electric needs to fix this before scaling further.
8. 📊 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 44.93% ✅ |
| ROE | 33.09% ✅ |
| OPM | 37.5% ✅ |
| EPS | ₹13.79 ✅ |
| Debt/Equity | 0.00 ✅ |
| Dividend Yield | 0.64% ✅ |
| Debtor Days | 154.6 ❌ |
| Working Capital Days | 138.8 ❌ |
Fundamentally sexy, but operationally thirsty.
9. 📉 P&L Breakdown – Show Me the Money
| FY25 | Value |
|---|---|
| Sales | ₹25.5 Cr |
| Operating Profit | ₹9.56 Cr |
| Net Profit | ₹7.57 Cr |
| EPS | ₹13.79 |
| Dividend | 0% in FY25 |
Even though profit grew, dividend payout = zero. That’s fine if it’s being reinvested wisely.
10. ⚔️ Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE | ROE | OPM |
|---|---|---|---|---|
| Evans Electric | 16.9 | 44.9% | 33.1% | 37.5% |
| NESCO | 22.5 | 20.3% | 15.2% | 59.8% |
| CMS Info | 22.4 | 23.4% | 17.7% | 25.9% |
| Nirlon | 21.1 | 30.1% | 59.8% | 79.1% |
EEL punches way above its weight on returns.
It’s like a microcap version of NESCO meets CG Power, but with no real brand moat or infra scale yet.
11. 👨👩👧 Miscellaneous – Shareholding, Promoters
- Promoters: 59.44% (Stable for 5+ years)
- FIIs: 0%
- Public: 40.56%
- Total Shareholders: 577 (Mar 2025)
✅ No pledging
✅ No shady dilution
✅ No sudden promoter exits
❌ No institutional interest yet
Also worth noting:
- Resigned MD and Whole-time Director (April 2025)
- New CEO brought in (June 2025) — this transition will decide next chapter
12. 📢 EduInvesting Verdict™
Evans Electric is the kind of SME hidden gem that analysts ignore, but smart money loves.
✅ Strong fundamentals
✅ Scalable niche (industrial repairs + parts import substitution)
✅ ROCE rocket + real earnings
❌ Working capital and cash flow need urgent adult supervision
❌ No institutional backing yet
❌ Execution risk if new leadership fails to scale
At ₹234, it trades at ~17x trailing.
Not cheap, not expensive. But loaded with quiet compounding potential.
🎯 Fair Value Range: ₹248–₹331
No FOMO, no hype. Just industrial thok-pitai, done profitably.
✍️ Written by Prashant | 📅 July 2, 2025
Tags: Evans Electric, SME Stock, ROCE Stocks, Repair Business, Microcap India, Industrial Services, High ROE, Rajesh Dhekane, SME Gems, EduInvesting
