We attended the Investor Day organised by Greaves Cotton (GRV). Key takeaways: (i) Electric Vehicle (EV) 2W focus is on: `70K–90K price points; B2B (low and city speed); and B2C (high speed). (ii) Launches planned for the high-speed segment; the ambition is to be among the top three players in India. (iii) Engines: Apart from mobility, the company is focusing on the entire spectrum of agri solutions, power solutions and industrial applications, and eyeing exports too.

Strong traction in e-mobility, an expanding engines business and a sound balance sheet imply GRV is poised for a faster ramp-up and it will be able to exploit its first-mover advantage. Maintain ‘Buy’ and TP of `224 (16x Dec-23E for engines and 3.7x sales for EV).

EV strategy: GRV’s focus is on the belly of the market, which is currently the `70K– 90K pricing. It forayed into low-speed, moved to city-speed, and is now eyeing high-speed as the price curve of the belly has moved up. B2B remains a key piece of the strategy. Management expects demand for low-speed/city-speed products given the focus on unit cost economics in B2B.Technology: At the moment, GRV is not looking to invest in cell manufacturing given high capex intensity as well as its evolving landscape. The key focus is on software. BMS and motor controller are also areas of focus. The aim is to have products that are affordable and functional.

Also read Greaves Cotton posts record revenue for Q1 FY2023, profit of Rs 16 crore

Capacity:

E2W at 25Ok on a single- shift basis, E3W at 30K on a two-shift basis, and engines at 270k in two shifts. It expect E2W penetration to touch 4–5% in FY23 versus 1.7% in FY22 (231k units). Hence, GRV has adequate capacity to meet demand.

Battery swapping:

May not be a viable proposition in the B2C model as currently single charge offers a run of ~70km while the daily run on average is 20–30km. That said, batter swapping can be a compelling proposition for B2B.

Outlook: Dealership expansion; focusing on agri, power solutions

Financing and dealership:

In the EV business, GRV is not looking to set up a captive financing unit. Tie-ups with financiers can take care of financing needs. Currently, it has ~250 dealers; the plan is to expand it to ~500 by the end of FY23. Dealers are franchises, not company-owned units.

Engines business:

The company has already transitioned from being an auto engines player to a wider cluster. The transition began during Covid, driven by a variety of applications that GRV engines were used for. From now on, the focus will be on solutions in agri, power and light construction. GRV will also focus on exports as well as adjacencies such as components. The company is perceived to be a value-for-money player by consumers, and management aims to encash this image.