Modison LTD - Can the switchgear company switch fortunes?

[harsh.beria93]

AR23 notes:
Management change

• Kumar Jay Modi (son of Managing Director G.L Modi) became Jt Managing director
• Rakesh Singh (non-executive director) and Manish Srivastava (joint MD) resigned
• Murlidhar Narayan Nikam was appointed as CEO (very impressive profile; ex CG Power and Crompton Greaves)

Miscellaneous

• Losses on forex hedging: 2.56 cr. (vs 3.54 cr. in FY22)

• Inventory was 78.52 cr. in FY23

• # of employees : 261 (vs 257 in FY22)

• Increase in management salary: 12.57% (vs 10.78% in FY22). This was despite drop in profits by 27%

• Increase in other salary (except management): 11.17% (vs 8.39% in FY22)

• Share price : 49.55 (low), 81.15 (high)

• # shareholders : 15’736 (vs 17’182 in FY22). Dheeraj Kumar Lohia held 0.61% and is a new entrant in top 10 shareholder list

• Audit fees : 8.8 lakhs (vs 6.35 in FY22)

• Total tax disputes : 75 lakhs (vs 10.25 cr. in FY22). Seems 10 cr. tax dispute is close to being solved
  

  

• Doubtful receivables : 1.89 cr. (vs 1.4 cr. in FY22)
  

  
  
  
  

• Advances from customers: 7.72 cr. (vs 4.1 cr. in FY22)

• Other expenses breakup:

• Received Certificate of Appreciation from Siemens Energy and ABB- Supplier Summit Award 2022

• Our new flat organization structure enables streamlined decision-making and lowers transactional costs. We have also implemented a Reward & Recognition scheme to create an environment of Performance Excellence, which has started showing desired results and is expected to add significant value to our organization

• Since FY22 project of construction of Modison Government College is under progress

• Certifications: ISO9001:2015, ISO14001:2015, and 45001-2017

R&D projects

• R&D spends: 75.71 lakhs (vs 80.49 lakhs in FY22) capitalized, 43.23 lakhs (vs 55.3 lakhs in FY22) recurring (total: 1.19 cr. vs 1.36 cr. in FY22 )

Related party transaction with Modison Copper:

• Purchase: 26.25 cr. (vs 27.09 cr. in FY22)

• Sale: 1.69 cr. (vs 4.66 cr. in FY22)

• Took approval for transactions upto 50 cr.

Broad outlook

• During FY23, managed its growth in high voltage & continued momentum in terms of volume for low voltage.

• Adverse input cost movement including silver impacted profitability in short terms.

• FY24 focus will be on cost optimization & innovation that include new product development, automation, new market development

• Witnessing supplier consolidation and China+1 from key clients thereby having higher wallet share

• Engineering Goods sector constitutes >27%, accounting for largest share of India’s total exports. Growth in engineering goods exports in recent years has largely been due to the zero duty Export Promotion Capital Goods (EPCG) scheme

• India Switchgear market is expected to grow with a CAGR of more than 5% from FY23 to FY28. Low Voltage Switchgear market is formed by commercial, residential buildings, real estate industry, and construction sector.

• Medium and High Voltage Switchgear is expected to have stagnant growth during the forecast period 2023.

• Company’s HV competitors are from Europe it is imperative that Company remain in sync with the global manufacturing norms

• Has 2 plants in Western India (Vapi and Silvassa), employing more than 500 people

Capex plans

• Spent 12.5 cr. with most addition being seen in CWIP

• We have started our capex plan for upgradation of our existing facilities by infra expansion, both green and brown field, procuring automated machinery and robots etc. Started construction of new factory at existing premises and at new plot near existing factory. These will be commercialized in FY24.

Disclosure: Invested (position size here, no transactions in last-30 days)

[harsh.beria93]

I attended Modison’s AGM, sharing notes of the same.

1. Last year we had guided for sales of 500 cr. by FY25 and 1000 cr. by FY30. Given that FY23 didn’t see any sales growth, what is our sales target for FY25 and beyond?

2. Can you provide a sales breakup between HV and LV contact segments. In FY22, we did 250 cr. from LV and 80-90 cr. from HV. What was the nos in FY23?
249 cr. LV, 86 cr. HV

3. What was the volume growth in HV and LV segments in FY23?
HV: difficult to measure
LV: 1.5% volume growth

4. Given that companies like Shivalik Bimetals has also entered contact segment, how do we see competitive landscape changing?
Shivalik is mainly into thermo bimetals

5. Our samples were under approval for Polycab. Have we started supplying commercially to them?
Still discussing with them

6. With our current brownfield and greenfield expansions, how much capacity will we be adding in LV and HV segments?
LV: brownfield expansion in a plant near existing facility, melting facility shifted to new facility
Greenfield project for HV segment is under construction phase and will finish in FY24

7. We were trying to move into supplying entire assemblies to our big customers which would have contributed to our margins. How is that going?
8. In last 2 years, our margins have been adversely impacted due to sharp movement in silver prices and due to currency fluctuation. How are we addressing it?
PAT decline was due to silver price fluctuation. Performance improved in Q4FY23

9. We had started small supplies of silver salts to pharma and lifescience companies. How is that business doing?
10. Despite a large drop in our profits in FY23 (27% lower), why has management remuneration increased by 12.57%?
11. Can you talk about our R&D initiatives in nickel and other alloys?
Still finding partner

New market development

• Plants to enter new markets
• New business development

• Focusing on export growth

Disclosure: Invested (position size here, no transactions in last-30 days)

[Debojit_Kangsa_Banik]

@harsh.beria93

Adverse input cost movement including silver impacted profitability in short terms

Probably noob question, how will Silver price impact the business? How will the current silver price increase impact the company?

[vraokasturi1]

You seem to be closely tracking Modison. Any idea what happened to the mou from Nov 2021 with Renera & Lcharge?
There’s no news about it in any presentations after that

[harsh.beria93]

I attended Modison AGM, sharing notes below.

1. At the last AGM, we were expecting to reach 410 cr. in FY25 which we already accomplished in FY24 and we are now expecting to reach 475 cr. in FY25. Congratulations for the very good growth. Can you tell us what drew growth in FY24 and do we now envisage reaching 1000 cr. earlier than FY30?

Strong order pipeline, confident of reaching 1000 cr. target by FY30

2. In FY23, we did 249 cr. from LV and 86 cr. from HV. Can you provide a sales breakup between HV and LV contact segments in FY24.
312 cr. LV, 92 cr. HV in FY24. Expect this mix to be similar in future.
Additionally, working on product diversification

3. What was the volume growth in HV and LV segments in FY24?
10% LV volume growth
HV volume growth difficult to quantify

4. We have done well in export markets and have been mentioning opportunities from our large customers as part of China+1. We also see advances from customers increasing from 4.1 cr. in FY22 to 13.57 cr. in FY24. Can you tell us the potential of growth in export markets, and the Chinese competition?
Export growth 26%
Automation investments will decrease cost of operations and improve competitive abilities vs Chinese suppliers
Continuous expansion in exports
Good orders from export customers

5. We were trying to move into supplying entire assemblies to our big customers which would have contributed to our margins. How is that going?
May get some advantage in FY25

6. We were earlier discussing increasing our business with Polycab. Have we started supplying commercially to them?
Has been dropped

7. With our current brownfield and greenfield expansions, how much capacity will we be adding in LV and HV segments? And will they be enough for reaching 1000 cr. revenues?
8. When will our new capacities come onstream?
Greenfield is almost completed
Capex done in FY24 for growth in next 2-3 years

9. Can you talk about our R&D initiatives in nickel and other alloys?
Doing R&D to introduce import substitution products

Improved EBITDA margins despite huge volatility in silver prices

Disclosure: Invested (position size here, no transactions in last-30 days)

[SAM2003]

Q1 2025 results are out and do not meet the market’s expectations. No wonder this company is the market leader in HV/LV switchgear contacts and has been doing business for more than 60 years but has not developed a moat in business. Their business prospects are up/down due to commodity price fluctuations.
this quarter’s gross profit margin is less than 1%
Silver hedging loss 3.75 cr and profit 1.14 cr.
Invested and sold 50% holding after Q1 25 result.

[harsh.beria93]

In the last few quarters, Modison has been reporting very high sales growth (20-40%).

Additional, there are other metrics which also show very good scaleup.

1. Customer advances has been increasing continuously over years (FY22: 4.1 cr., FY23: 7.72 cr., FY24: 13.57 cr.).
2. An interesting insight from their recent rating report was their order book has now reached 100 cr. (vs 64 cr. in December 2023).

They also posted their highest ever quarterly PAT of 8 cr. in September 2024. This is in-line with their FY25 PAT guidance of ~30 cr. Earlier, they used to have significant hedging losses, which seem to have reduced over years (FY22: -3.54 cr., FY23: -2.56 cr., FY24: +5.59 cr.). Although, this number tends to be volatile. I am sharing my additional notes on Modison.

10.05.2024 interview

• Did 33 tons silver volumes in FY24 and expect 10-12% tonnage growth in FY25
• Their domestic switchgear customers are growing at 20-25%
• Solar energy annual silver demand is projected to be 2700 tons in 3-5 years
• Electric vehicle annual silver demand should be 70-80 tons initially and increase to 300 tons in 3-5 years
• Cadmium will be banned soon

30.12.2024 Care

• Long term bank facilities increased from 60 cr. to 90 cr.

• LV (including MV) & HV contributes 75% and 25% to revenues

• Contribution top five customers was 40-45% over last 3-years

• Top five suppliers accounted for 65-70% of purchases over last 3-years

• FY24 growth largely driven by LV segment

• Unexecuted order book of 100 cr. as on December 15, 2024

• Raw material: Silver, copper and tungsten with silver forming around 75-80% of raw material purchases

• Does not have a defined hedging policy

• 15% sales as exports and 10% purchases via imports

• 35% of inventory is currently hedged

• On an average it takes 30 days for LV contacts and six weeks for HV contacts to supply to customers.

• Operating cycle: 128 days (vs 134 days in FY23)

• Average maximum utilisation of fund-based limits and non-fund-based limits stood at ~86% and ~9% respectively for 12-months ended October 31, 2024

• Installed capacity of 250 thousand arcing contacts for HV and 33 tonnes per annum of LV contacts at its Vapi plant

Disclosure: Invested (no transactions in last-30 days)

[rohitbalakrish_]

Hi Harsh,
Thanks for your notes here. Have briefly worked on it long back, but not very updated.

Just a noob question - How much of this growth can be attributed to inventory gains owing to strong Silver prices in the last couple of years?

[harsh.beria93]

@rohitbalakrish_

Just a noob question - How much of this growth can be attributed to inventory gains owing to strong Silver prices in the last couple of years?

Hard to say, silver pices are up close to 35% in last year. Management in their May interview talked about 10-12% volume growth, so maybe a larger part of recent growth was driven by silver realizations.

[harsh.beria93]

Adding my recent notes on Modison.

AGM25 notes

1. Targeting 561 cr. sales in FY26 (14% growth) and 1000 cr. by 2030
2. LV: grew 24% (386 cr.); volume only grew by 3.5%. Growth was higher than global market
3. HV: grew 11.3% (103 cr.); volume grew by 10.1%. Growth was higher than global market. Targeting 8% growth in FY26
4. Not hedging silver anymore
5. 243 new products delivery. Working on a few more products, don’t want to discuss in public call
6. Existing setup is enough for 1000 cr. Expanding more into HV segment, will hear back in next AGM

Highlights for FY25

Growth strategy

General comments
Slow growth, global risks are higher, more complex business environment with supply chain realignment
Got Ecovadis sustainability rating (bronze, targeting silver)

Annual report 2025 notes
Miscellaneous

• Sales increased by 21.8%, exports by 23.7% (77.67 cr. vs 62.79 cr. in FY24)
• Most of their forex sales are in Euro
• Profits on forex hedging: (1.08 cr. loss) in FY25; 5.59 cr. gain in FY24, (2.56 cr.) loss in FY23)
• Advances from customers: 6.76 cr. (vs 13.57 cr. in FY24, 7.72 cr. in FY23)
• Inventory was 127.48 cr. (vs 96.11 cr. in FY24, 78.52 cr. in FY23)
• Expanding into export segments to reduce dependency on domestic OEMs
• Shareholders: 21’639 (vs 19’355 in FY24, 15’736 in FY23)
• Audit fees: 11.09 lakhs (vs 10.28 lakhs in FY24, 8.8 lakhs in FY23)
• Forex outflow: 50.18 cr. (vs 32.74 cr. in FY24)
• Recovered 5 cr. intercorporate deposits, no outstanding ICDs
• Total tax disputes: 4.8 cr. (vs 1.8 cr. in FY24, 75 lakhs in FY23)
• Doubtful receivables: 1.08 cr. (vs 1.93 cr. in FY24, 1.89 cr. in FY23)
• Borrowings: Secured loan interest rate ranges between 8.05-8.5% pa, unsecured loan for working capital has interest rate of @8.50%. Enhanced borrowing limit to 300 cr.

R&D projects

• R&D spends: 2.11 cr. vs 1.98 cr. in FY24, 1.19 cr. in FY23

Related party transaction with Modison Copper:

• Purchase: 38.57 cr. (vs 26.47 cr. in FY24, 26.25 cr. in FY23)
• Sale: 4.81 cr. (vs 3.11 cr. in FY24, 1.69 cr. in FY23)
• Service Received/Maintenance Charges: 1.82 cr. (vs 1.5 cr. in FY24)
• Took approval for transactions upto 80 cr. (vs 65 cr. in FY24; 50 cr. in FY23)

Capex plans

• Spent 15.65 cr. (vs 15.8 cr. in FY24, 12.5 cr. in FY23)
• Vehicle loan taken (1.6 cr.) from Mercedes-Benz Financial Services India Pvt. Ltd, carried interest @8.50% and is repayable in 36 monthly installment

30.12.2025 Care

• Long term bank facilities increased from 90 cr. to 115 cr. + new bank facilities of 25 cr.
• LV (including MV) & HV contributes 80% (vs 75% in FY24) and 20% (vs 25% in FY24) to revenues
• Top five customers contributed ~45%
• Top five suppliers accounted for 60-65% of purchases
• FY25 growth of 21% was driven by improved realizations because of rising silver prices
• Higher working capital because of increase in silver prices
• Raw material: Silver, copper and tungsten with silver forming around 75-80% of raw material purchases
• 15% sales as exports and 7% purchases via imports
• Operating cycle: 139 days (vs 128 days in FY24, 134 days in FY23)
• Average maximum utilization of fund-based limits and non-fund-based limits stood at ~85% and ~15% respectively for 12-months ended October 31, 2025

Disclosure: Invested (no transactions in last-30 days)

[abrahamappu]

Hi all

I feel that the audited FY26 results indicate that a profound, non-linear Operating Leverage Breakout has taken place in Modison.

The business has fundamentally detached from its historical cyclicality.

1. The Core Numbers: Cracking Open the Financial Inflection

Modison’s recent performance shows an exceptional acceleration in execution velocity, running its manufacturing lines at optimal capacity utilization to feed an aggressive global order book.

• Top-Line Surge: Revenue for Q4 FY26 came in at ₹289.12 Crore, representing an explosive 119.6% YoY growth compared to ₹131.63 Crore in Q4 FY25. Sequentially (QoQ), revenues grew by a staggering 99.88% over Q3 FY26’s ₹144.65 Crore.
• Profitability Explosion: PBT and PAT have witnessed massive, multi-fold expansion due to operating leverage. Net Profit (PAT) for the quarter came in at ₹36.00 Crore, marking a magnificent 277.8% YoY growth over Q4 FY25’s ₹9.53 Crore.
• Full-Year FY26 Picture: For the full year, Net Profit has surged to ₹72.55 Crore, driving Full-Year Earnings Per Share (EPS) to an outstanding ₹22.35.

2. The Great Cash Flow Reversal: Fixing the Historic Flaw

The most significant insight for long-term investors lies in the structural fix of the working capital cycle.
In FY24 and FY25, Modison suffered from severe cash constraints (FY25 CFO was negative at -₹16.10 Cr) because millions were trapped in silver/copper inventory buffers and prolonged debtor collections.
In FY26, this dynamic completely flipped. As full-year sales rocketed to ₹710.33 Crore, inventory turnover velocities accelerated dramatically. More importantly, due to the critical component supply shortages facing the global electrical grid network, Modison has gained the structural pricing power to compress payment windows with large buyers. Full-year CFO has comfortably overtaken accounting profits, tracking at ₹85+ Crore, pulling the CFO/PAT ratio back above 1.15x.
This cash liberation has blasted core return profiles into premium territory:

• Return on Capital Employed (ROCE): Scaled past 30.8%
• Return on Equity (ROE): Scaled past 32%
• Balance Sheet: Remains virtually net-debt free with zero promoter pledge.

3. The Re-Rating Thesis: Why a Multiple Expansion is Logically Inevitable

Modison currently sits at a market capitalization of ~₹815 Crore, which implies the stock is trading at a trailing P/E ratio of just ~11.2x.
When we evaluate Modison against the “Other Electrical Equipment/Products” industry average peer group (where the sector average P/E sits at ~38.7x), Modison is trading at a steep 70% valuation discount.
A multiple expansion from 11x to the industry benchmark of 38x is highly logical and structurally supported due to three core structural transformations:

A. The Shift from Cyclical to Structural Capex (The Expanding Jungle)

Modison is no longer a localized cyclical bet. It is a direct pick-and-shovel proxy for India’s generational ₹9 Lakh Crore National Electricity Transmission Plan running to 2032. The clean energy migration requires hundreds of remote solar/wind farms to connect to urban centers, triggering a massive wave of high-voltage substation builds. Every single substation require high-voltage switchgear. As the dominant domestic manufacturing force clearing rigid vendor audits for switchgear titans like Siemens, ABB, Schneider, and L&T, Modison’s execution visibility is highly secure.

B. High-Margin Annuity/Replacement Engine

Unlike standard heavy machinery manufacturers who only sell a product once, Modison makes a high-precision electrical consumable. High-voltage arcing erodes silver contacts during regular grid operations. These components must be systematically replaced during routine utility maintenance to prevent grid failure. This creates a highly predictable, non-cyclical, high-margin replacement/annuity revenue stream anchored to the country’s expanding installed base.

C. Transitioning out of the Micro-Cap Shadow

At a sub-₹1,000 Crore valuation, Modison has historically been completely invisible to domestic mutual funds and large institutions. Now that the financial framework boasts a 30%+ ROCE, zero debt, and a liquid ₹72 Crore clean profit block, the business is primed to transition into mainboard small-cap visibility, driving structural institutional accumulation.

Conclusion

If Modison’s P/E expands to simply match the 38x industry average benchmark on its current earnings baseline, it implies a target market cap of ₹2,756 Crore—representing a ₹849 share price (a 3.4x re-rating move) from current levels, requiring zero additional top-line growth.
The historical bear case of weak cash quality and flat industrial growth has been entirely demolished by the FY26 structural performance. Modison is a classic candidate for an aggressive market re-rating, transforming from a perceived low-end metal refiner to an elite engineering gateway component leader for the global energy infrastructure super-cycle.
Would love to hear views from members who are tracking the raw material hedging dynamics and their ongoing high-value advanced tungsten product expansion lines.

[Mockin_Jay]

Excellent write up. Only thought of this company as a play on silver with a good dividend yield for a small cap. The results from last quarter showed signs of just how much silver price could expand their margins but given the fire in february, expectations werent high. Utterly blown away by just how potent the operating leverage actually was this quarter. If silver prices maintain, (and I believe they will maintain) and with no more fires disrupting function, and them making prudent judgements on their silver hedging, I believe the company is looking at an easy 40rs minimum EPS for FY27. Assigning even a 25 P/E rating to this company then would take it above 1000. Thats not considering the growth ambitions the company may have.

Disclosure: invested and biased. Not a recommendation for investing.

[ha_the_meow]

I Studied This Unique MicroCap Stock With Unique Business | Modison Ltd | Re-Rating Opportunity ?
Modison Ltd: The Undervalued “Power” Play No One Is Talking About

2 good videos I found which summarize the company, also why doesn’t management release PPTs/updates anymore?

found these on X (credits to @SkyLake00811546)

Ceo linkedin - Murli Nikam | LinkedIn

[Vivek_Chadha]

I heard they are doing product expansion, anyone having idea about it?

[ha_the_meow]

Nothing on public forums as far as I know except for some twitter handles making AI slop posts recently after it went into lower circuit. can you share you source?

Also, their receivables and inventory increase are way more than sales increase. Short-term borrowing also up 100cr (Debt to equity now at 0.6 from 0.3), could anyone point out to the reason? And they are giving so much dividend as well…

found this online

In February 2026, a substantial fire incident occurred at Modison’s primary manufacturing facility in Vapi, Gujarat, causing a net exceptional loss of roughly ₹10.6 Crore. Simultaneously, they faced an exceptional loss of Substantial crores on silver hedging contracts.

A temporary operational halt meant shipments froze for a brief window while finished goods and raw materials piled up inside the warehouse waiting for the Vapi plant to restore full capacity

Edit
Care credit report 1 jan 2026

From 50% to 85% credit limit hit, and they are having cash crunch hard

[ha_the_meow]

found some management commentary, will keep adding here if i find more

Investor Meet recording sept 2022
transcript for above video

41st Annual General Meeting transcript

42nd agm video

smol 3 min interview 2025

[RocketMan]

@harsh.beria93

Not hedging silver anymore

Silver prices started rising from June last year and so did company’s margins. No data on volume growth is available.

“Silver, which accounts for ~75-80% of raw material purchases.” - Credit Rating

So, assuming ~80% inventory is raw silver (un-hedged)

[RocketMan]

Domestic Competition → Electrical Contacts & Rivets for Switchgear & Devices | Hindustan Platinum

[RocketMan]

Primer on electrical contacts (short read) →

Primer on electrical contacts.pdf (235.5 KB)

So, after digging into it, the TAM seems fairly small, competition is present, and there doesn’t appear to be anything particularly unique about Modison.

Also, a large part of the margin expansion seems to be driven by inventory gains from higher silver prices rather than any structural improvement in the business.

[ha_the_meow]

I think there is 3 quarter delay in increase in price of siler and realization in sales, but the margin expansion in latest quarter might have been due to foretold shift of product mix to HV contacts as they have better margins.

Also, they did capex in arching contacts capacity (HV contacts) in FY23 and FY24.

This is from 2023 PPT

latest snap from site

CWIP was about 10 crore and mostly they were done with it in Fy24 (they told in july FY24 AGM), also their AR 2025 confirm that building CWIP became 0 (from 7.92 crore) in FY 25 and plant machinery dropped from 2.0 crore to 0.63 crore in FY25. Moreover, they did fresh investments of 2.598 crore in FY 25 whose status we will see when FY26 annual report comes. Its also possible that their increase in revenue might be from this capex getting live.