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Shivalik Bimetal – Manufacturer of Thermostatic Bi-metal/Tri-metal strips, and shun resistors

Updated: Sep 21, 2023

Company Name –Shivalik Bimetal Controls Limited (Shivalik Bimetal)

Current Share Price – INR 658 (June 20, 2023)

Market Cap – INR 3,790 cr


1. What is interesting about the stock?

The popularity of electric vehicles (EVs) has grown, but they still face several challenges when compared to traditional internal combustion engine (ICE) vehicles. Some of the main obstacles include the availability and accessibility of charging infrastructure, which remains a significant concern for EV owners. Although the charging network is expanding, there are still fewer charging stations available compared to gas stations, creating range anxiety for long-distance travel and limiting the convenience of charging, especially in areas with inadequate infrastructure.

Charging an EV takes longer than refueling an ICE vehicle, even with fast-charging technology. This discrepancy can inconvenience drivers who are used to quick refueling stops.

EVs are still more expensive upfront than equivalent ICE vehicles due to the cost of battery technology. Although battery costs are decreasing, they still make up a significant portion of the vehicle's price. Additionally, the lifespan and degradation of batteries over time can raise concerns about replacement costs and overall vehicle longevity.

The role of batteries in EVs cannot be overstated. Battery management systems (BMS) rely on metal strip shunts/resistors to monitor the current flowing in and out of batteries. This allows for accurate tracking of battery charging and discharging, which is vital for battery health monitoring, state-of-charge estimation, and protection against overcurrent conditions.

Shivalik Bimetal Controls Limited is a manufacturer and supplier of high-quality thermostatic bi-metal/tri-metal strips and components, current sense metal strip shunts/resistors, and other electron beam welded products. The Company specializes in various methods of joining metals such as diffusion bonding, electron beam welding, continuous brazing, and resistance welding. Shivalik Bimetal provides precision-manufactured components that meet the specific needs of its customers.

More on key products..

Thermostatic bimetal and tri-metal strips are versatile tools that respond to temperature changes at different rates of expansion or contraction. These strips are essential in applications that require temperature sensing, control, and regulation. There are several common uses of thermostatic bimetal/tri-metal strips that include:

  • Thermostats: A thermostat's bimetal strip expands or contracts with temperature changes, causing mechanical movement that opens or closes electrical contacts. This feature enables the thermostat to regulate heating, cooling, and HVAC systems' temperatures effectively.

  • Temperature Sensors: Bimetallic or trimetallic strips' differential expansion or contraction causes mechanical displacement in response to temperature changes, which can be measured and utilized for temperature monitoring.

  • Circuit Breakers: Bimetal/tri-metal strips are integrated into circuit breakers to prevent thermal overload. When a circuit breaker experiences excessive current flow, the bimetal/tri-metal strip heats up due to the current passing through it. The strip's differential expansion triggers a mechanical mechanism that opens the electrical contacts, halting the circuit and preventing overheating damage.

  • Thermal Switches: Thermal switches rely on bimetal/tri-metal strips to control electrical equipment's temperature-based operation. These switches are commonly found in consumer electronics such as irons, coffee makers, hairdryers, and other appliances. The bimetal/tri-metal strip responds to temperature changes and actuates the switch, turning the device on or off accordingly.

  • Automotive Applications: Thermostatic bimetal/tri-metal strips regulate engine operating temperatures in automotive thermostats. These strips play a vital role in controlling coolant flow through the engine, ensuring optimal performance and preventing overheating.

Metal strip shunts/resistors are components that play an essential role in providing precise electrical resistance in circuits. They are widely used in various electrical and electronic applications that require accurate current measurement, current sensing, and voltage drop measurement. Here are some common uses of metal strip shunts/resistors:

  • Current Measurement: By connecting the shunt in series with the load, a small voltage drop is generated across the shunt that is proportional to the current flowing through it. This voltage drop can be measured and used to accurately determine the current flowing in the circuit.

  • Current Sensing: The voltage drop across the shunt can be measured to monitor the current, which is then used for various purposes, such as controlling the operation of power electronics devices, motor control, or as part of a feedback system in electronic circuits.

  • Power Distribution Systems: Metal strip shunts/resistors are used in power distribution systems, such as switchgear and distribution panels, to measure and monitor the current flowing through different branches or circuits. They help in load balancing, fault detection, and ensuring safe and efficient power distribution.

  • Battery Management Systems: Metal strip shunts/resistors are vital in battery management systems (BMS). They are used to measure the current flowing in and out of batteries, enabling accurate monitoring of the battery charging and discharging processes. This information is critical for battery health monitoring, state-of-charge estimation, and protection against overcurrent conditions.

  • Electronic Instrumentation: Metal strip shunts/resistors are used to calibrate and validate current measuring equipment, such as ammeters and clamp meters, ensuring accurate current measurement and calibration.

  • Automotive Applications: They are commonly found in battery management systems, charging systems, motor control units, and other electrical components where precise current monitoring is necessary.

Exports contributed to 65% of revenue in FY23.

Why invest in Shivalik Bimetal?

  • Promoters and management with three decades of experience in the segment

  • Being one of the few manufacturers of bimetal parts and shunt resistors in India, Shiavik Bimetal faces limited competition

  • Reputed and diversified client base - Schneider Electric (India) Private Limited, Havells India Limited, Larsen & Toubro

  • Caters to high-growth industries like EV, Smart Meter, etc

2. Key Historical Financials

  • Company revenue and net profit have grown at a CAGR of 24% and 37% respectively in the last 5 years.

  • Revenue growth was 45% in FY23 and 39% in Q4FY23 on a YoY basis after strong growth in FY22

  • EBITDA margin expanded from 11% in FY20 to 23% in FY23 and Q4FY23

  • Cash flow conversion (CFO/EBITDA) was 61% in FY23 – Company needs to manage a high inventory level (200-250 days)!

  • ROCE and ROE were 38% and 34% respectively in FY23 – the return ratio has steadily improved after FY20 which has COVID-19 impact. ROCE before COVID was 24-28%

3. What is my view on company valuation?

Over the past year, Shivalik Bimetal's share price has surged by 2.7 times, mainly due to the expansion of multiples. However, the company's current P/E (TTM) ratio stands at 48x, and the EV/EBITDA ratio at 32x, which is significantly higher than its 5-year median P/E ratio of 24x. With estimated growth rates of 20-25% in the coming years and high working capital needs, the current valuation seems steep. For long-term investors, it may be prudent to consider investing at median P/E levels to ensure a margin of safety.

4. What are the risks to the investment analysis?

Risks to the analysis are:

  • Key raw material is Nickel and Copper which are volatile commodities

  • Working capital in the business is high – growth will need continuous funding from WC


About the Author

I have over 17 years of experience in venture capital, private equity, and investment banking across various sectors in India and the Middle East. I was last working with Majid Al Futtaim Holding (MAF), a leading conglomerate in the Middle East, to look after investments, M&A, and venture capital. I have prior experience in India with Tata Capital (Private Equity), Merrill Lynch (Investment Banking or IB), and Ambit Corporate Finance (IB). I bring the long-term ownership mindset to the analysis.

I graduated from the MBA program of the Indian Institute of Management Lucknow (2005) after completing the Bachelor of Technology program at the Indian Institute of Technology, Kharagpur (2002).

I am an Insignificant Investor in the public market and co-founder of SocInvest.


I have no stock, option, or similar derivative position in any of the companies mentioned in the last 30 days, and shall not initiate any such positions within the next 5 days. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from SocInvest). I have no business relationship with any company whose stock is mentioned in this article.

I am not a SEBI registered advisor. This article is purely for educational purposes and is not to be construed as investment advice. Please consult your financial advisor before acting on it.

I have used publicly available information while writing this article.



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