A potential break-through in estimating electricity meter TAM for Shivalik.
This diagram is from Permanent Magnet’s FY22 AR. As per this, there are 2 shunts in each electricity meter.
Now, from Indiamart one can see that Shivalik is selling these shunts for electricity meters @ Rs 15/piece (For orders of 10000 pieces at a time).
Assuming this to be the supply price, we can put two and two together to roughly hazard a guess about potential TAM for Shivalik for the electricity meter procurements under GOI’s smart electric meter scheme which seeks to replace 25Cr conventional meters with smart meters in 3 years. 3 years seems like quite a stretch so let’s assume GOI will complete this in 5 years. So total revenue potential for shunts via this program is ~INR 750Cr (25Cr meters * INR 15/shunt* 2 shunts/meter) over 5 years. This is the TAM.
Now PML is pretty deep into the value chain of electricity meters and they have been aggressively talking about shunt based sensors in their latest AR. There are 26 mentions of shunts in the FY22 AR for PML vs only 1 mention in the FY21 AR where they had stated their intention of getting into shunt assemblies
From the reading in AR21 and AR22 it seems like they are assembling shunt components right now rather than manufacturing it. But I am not sure of this, they may be manufacturing basic shunts as well (Will be great if somebody tracking PML can confirm this). If PML doesn’t manufacture shunts then it likely sources them from SBCL in which case SBCL may be in a position to capture the entire smart meter replacement driven TAM of 750Cr. If on the other hand PML is manufacturing it, SBCL may only be able to capture 30-50% of the TAM, which is 300-400Cr.
So, on a very rough basis, annual revenue potential from digital electricity meters for SBCL might range anywhere between 25Cr-150Cr for the next 5-10 years based on how much share it can grab and what timelines the project extends for (5/8/10 years). Its a one time opportunity and will taper down once the replacement program finishes.
Any revenues from smart metering haven’t been included in the projections in my previous post.