Saietta shares jump as Indian joint venture wins 2nd major eDrive order
Over the past 2 years investors have endured unprecedented pain. But as Winston Churchill once famously said: “If you're going through hell, keep going.”
Indeed the same indomitable spirit has been adopted by many smallcap firms like specialist eDrive provider () (mrkcap £24m) after seeing their share price almost obliterated during the Bear market.
Nevertheless, it's often ‘darkest before the dawn’, and Saietta’s VE Day appears to be within sight. Importantly too, demand remains strong for its customisable, end-to-end eDrive solutions (revenue combining RFT/AFT motors, transmissions, software and electronics), as evidenced by today’s 2nd contract win with a large Indian EV OEM.
Sure the £106k pilot purchase order only covers the next 3 months. Yet this is just the start, with targeted revenues (subject to future POs) for Saietta VNA (49.5% joint venture with Padmini VNA Mechatronics) of c. £12.7m in the first 12 months, and 60,000 units over 5 years.
Better still, this deal comes hot on the heels of a similar one signed with the same customer indicating year-one revenues of £11.2m. Which together would generate a potential annualised run-rate of nearly £24m and total minimum volumes of 100,000 units over 5 years.
But that's not all. There are 2 further platform solutions in the pipeline with the same OEM.
To me, this means Saietta Electric Drive has become one of the few tier-1 suppliers operating in this enormous and rapidly expanding EV nation. Hopefully also encouraging other major OEMs to come door-knocking.
So what's next?
Well, the main task is execution. High quality eDrives are already being produced in India and supported by resilient supply chain partners.
The last piece in the jigsaw is raising expansion capital (est £9-15m Canaccord Genuity Group) to finance this exponential growth. In fact, net cash (ex IFRS16 leases) at end of September was £0.4m vs. £7.2m in March 2023, with Canaccord reckoning there is sufficient liquidity to last until early 2024 after announcing the transfer of equipment into the Indian joint venture for £3m.
Elsewhere, Saietta is actively engaged in discussions with 2 potential partners to take on the industrialisation and commercialisation of its marine division (under the Propel brand) - where it could receive ongoing revenue and royalties from product sales, as well as technology transfer fees.
Exec Chairman Tony Gott commenting: "The 2nd eDrive model line based around our proprietary RFT motor is a game-changer for Saietta, as it opens up the huge Indian electric 2 wheel market. Currently electric 2 wheelers account for around 5% of all 2 wheel registrations in India, so the potential is very clear."
"[Additionally] we have solutions for two further product lines under development which we expect to mature into orders in time."
Lastly, in terms of the numbers, Canaccord have temporarily withdrawn their forecasts and target price in light of the planned capital raise.
Time to be patient.
shares jumped 16% on today's announcement.
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