Force Motors Vs Olectra Greentech: As the automotive industry accelerates its transition towards a more sustainable and eco-friendly future, two prominent companies in the commercial vehicle sector have been at the forefront of this transformation. The companies we are talking about are Force motors and Olectra Greentech.
In this article on Force Motors Vs Olectra Greentech, we compare the company, financials, ratios & see which one has better future plans..
Industry Overview
With a 7.1% GDP contribution and 19 million workers, India’s automobile industry is a major source of economic growth, innovation, and employment. It ranks fourth in commercial vehicle production globally and leads the two-wheeler segment, which accounts for 74.8% of market volume.
Passenger vehicles account for 18.4% of the market, followed by commercial vehicles (4.5%) and three-wheelers (2.3%). Domestic demand and exports are projected to generate industry growth of 7 to 10% in the coming fiscal year.
The industry has attracted US$ 34.74 billion in FDI between April 2000 and March 2023, and is projected to receive US$ 8-10 billion more by 2023. In FY23, total passenger vehicle sales reached 3.89 million and total automobile exports from India stood at 47,61,487.
The government has launched various initiatives to help the industry grow, including the Automotive Mission Plan 2016-26 and the FAME Scheme.
As the world moves towards sustainable energy sources, India’s electric vehicle (EV) market is also rapidly emerging as a promising sector, with an estimated value of US$ 7.09 billion by 2025. India has the potential to become a leader in shared mobility by 2030, which would significantly boost the demand for EVs.
Force Motors Vs Olectra Greentech – Company Overview
We learned a little bit about the industry in which the firms operate in the preceding part. Now, we’ll look at the similarities and differences between their businesses for our Force Motors Vs Olectra Greentech comparison.
Force Motors
Force Motors Ltd was founded in 1958 by Shri. N. K. Firodia with the objective of providing affordable commercial transportation for the masses by utilising the best available technology while offering economical, reliable, and efficient products.
Today, its products include Small Commercial Vehicles (SCV), Light Commercial Vehicles (LCV), Multi-Utility Vehicles (MUV), Special Vehicles (Off-roaders / Recreation Vehicles, Military Vehicles) and Agricultural Tractors.
The company has partnered with leading global automotive names like Daimler, BMW, Rolls-Royce, ZF, Bosch, MAN over the past 5 decades. This has enabled them to develop the necessary in-house expertise to harness the latest advances in technology and develop relevant mobility solutions.
Currently, the company exports its products to various countries in the Middle East, Asia, Latin America and Africa.
Olectra Greentech
Incorporated in 2000, Olectra Greentech Limited (Olectra) is India’s largest manufacturer of pure electric buses. The company was formerly known as Goldstone Infratech Limited and changed its name to Olectra Greentech Limited in July 2018.
The company runs its operations through Composite Polymer Insulators and Electric Buses segments. It manufactures insulators for transmission and distribution; tonne, bracket tube, and stay arm insulators for railways. Furthermore, it also manufactures and sells electric buses.
It is India’s first ever electric bus manufacturer to manufacture and deploy all variants of Electric Buses in India. After leading in the commercial run of electric buses, the company is aiming to expand its product line in the e-mobility segment for electric trucks and electric tippers.
Force Motors Vs Olectra Greentech – Financials
Now let us compare the financials of both the companies.
Revenue Growth
If we take a look at the revenues of both companies, we can see that the revenue growth of Force Motors was impacted by COVID-19 in FY21. However, the increasing trend continued in the following financial years.
From FY19 to FY23, the company’s revenue increased from Rs. 3734.07 crores to Rs. 5090.62 crores giving the company a CAGR growth of 8.06%.
On the other hand, Olectra Greentech’s revenues have increased year-on-year from FY19 to FY23. During this specific period, the company’s revenues increased from Rs. 185.01 crores to Rs. 1100.82 crores giving it a CAGR growth of 56.18%
The table below showcases the total revenue growth of Force Motors Vs Olectra Greentech for the last five financial years.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 3734.07 | 185.01 |
| 2020 | 3122.9 | 224.88 |
| 2021 | 2012.71 | 292.85 |
| 2022 | 3240.04 | 600.96 |
| 2023 | 5090.62 | 1100.82 |
| 4-year CAGR | 8.06% | 56.18% |
Net Profit Growth
Coming to the net profits earned by the companies, Force Motors profits took a hit during Covid and the company reported a net loss during FY21 and FY22. Though the company reported a net profit of Rs. 133.74 crores in FY23, it is still comparatively less than the net profit of Rs 143.42 crores earned during FY19.
This gives the company a negative CAGR growth of 1.73% on the net profit during the period.
When it comes to Olectra Greentech, the company reported a net loss in FY19 but has reported a profit ever since.
From FY19 to FY23, the company transitioned from a net loss of Rs.15.81 crores in FY19 to a net profit of Rs. 66.89 crores in FY23. This gives the company a CAGR growth of 70.40% on the net profit during the period.
The figures below highlight the net profit growth of Force Motors Vs Olectra Greentech for the last five fiscal years.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 143.42 | -15.81 |
| 2020 | 50.27 | 13.53 |
| 2021 | -123.54 | 8.07 |
| 2022 | -90.99 | 35.35 |
| 2023 | 133.74 | 66.89 |
| CAGR growth | -1.73% | 70.40% |
Profit Margins
When we compare the operating profits of the company, we can see that the operating profit margins of Olectra Greentech are better than the operating profit margins of Force Motors.
We can also notice that, while the operating profit margins of Force Motors were impacted due to COVID-19, the operating profit margins of Olectra Greentech have been on an increasing trend.
The figures below compare the operating profit margins of Force Motors Vs Olectra Greentech over the last five fiscals.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 7.6% | -8.91% |
| 2020 | 8.7% | 2.51% |
| 2021 | 0.65% | 7.17 % |
| 2022 | 2% | 14.26% |
| 2023 | 6.5% | 12.16% |
The net profit margins of both companies have followed a similar trend as the operating profit margins. Comparatively, Olectra Greentech has a greater net profit margin of 6.13% than the 2.66% margins of Force Motors.
The figures below compare the Net profit margins of Force Motors Vs Olectra Greentech over the last five fiscal.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 3.93% | -9.29% |
| 2020 | 2% | 6.75% |
| 2021 | -6.21% | 2.87% |
| 2022 | -2.81% | 5.96% |
| 2023 | 2.66% | 6.13% |
Return Ratios
Coming to the return ratios, we can see that Force Motors has RoCE has declined from FY21 to FY22 which was a result of its low financial performance. During FY23, the company has reported a an RoCE of 12.07%
One the other hand, Olectra Greentech’s RoCE has increased year-on-year with an exception during Covid. For FY23, the company reported a RoCE of 13.3%
The figures below highlight the RoCE of Force Motors Vs Olectra Greentech for the last five fiscal years.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 10.22% | -1.41% |
| 2020 | 3% | 4.22% |
| 2021 | -6.21% | 2.44% |
| 2022 | -3.35% | 7.73% |
| 2023 | 12.07% | 13.30% |
The ROE of both companies have followed a similar trend as the RoCE. During FY23, Force Motors reported an ROE of 7.38% and Olectra Greentech reported an ROE of 8.27%.
The figures below highlight the ROE of Force Motors Vs Olectra Greentech for the last five fiscal years.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 7.6% | -3.74% |
| 2020 | 2.5% | 2% |
| 2021 | -6.5% | 1% |
| 2022 | -5.08% | 4.6% |
| 2023 | 7.3% | 8.2% |
Both the ROE and RoCE of both companies are comparatively less when less to their peers in the industry. This suggests a below-average return on shareholders’ equity and not an efficient use of the company resources.
Leverage Ratio
The debt-to-equity ratio of both companies during the last 5 years indicates a positive signal. Both the companies have relied less on borrowed capital which means they can retain more of their revenue as they do not have a huge obligation towards the repayment of debt and the interest towards it.
The figures below highlight the debt-to-equity of Force Motors Vs Olectra Greentech for the last five fiscal years.
| Fiscal Year | Force Motors | Olectra Greentech |
|---|---|---|
| 2019 | 0.15 | 0.04 |
| 2020 | 0.16 | 0.03 |
| 2021 | 0.35 | 0.01 |
| 2022 | 0.61 | 0.09 |
| 2023 | 0.51 | 0.16 |
Future Plans
So far, we studied the financial statements of the company and understood how each company is performing. Let us now look at the futures of both companies to see what the company has on hold;
Force Motors
- The company has improved its component business for the supply of engines. This is a result of the increasing demand volumes from Mercedes-Benz India Pvt. Ltd and BMW India Pvt. Ltd.
- During FY23, the company has increased its expenditure on research and development which can result in the manufacture of new and cost-efficient vehicles.
- Consistent efforts have been made by the company to train its employees at various levels. This can help the firm increase its operational as well as marketing and sales efficiency.
- The company is attempting to increase its position in the commercial vehicle segment by introducing new cars, such as the recently introduced “Gurkha” SUV and the in-development “Urbania” van.
Olectra Greentech
The company intends to improve its current products and procedures. The following are a few examples of new R&D initiatives in various phases of development:
- In-house bus platform developed in collaboration with local Indian suppliers, with ladder chassis design for 12m city and intercity applications. This will be a cost-effective alternative for replacing traditional diesel buses with electric vehicles.
- Development of school bus and staff bus types for low-range consumer use.
- Focus on the manufacture of Ready-Mix Concrete vehicle that is entirely electric. This is a transit mixer truck used to transport pre-mixed concrete from the production plant to the construction site. This is the first all-electric Transit mixer truck in India.
- Focus on building a 4×2 EV Tractor-trailer with 55ton Gross Combination Weight capability for highway hauling. This platform might also be used in tip-trailer applications, steel coil carriers, cement bulker carriers, and so on.
- Development and localization of a new technological bus platform with sophisticated battery cell technology that can improve the range of existing goods while lowering the cost per kilometre of operation.
Force Motors Vs Olectra Greentech – Key Metrics
We’re nearly done with our Force Motors Vs Olectra Greentech comparison. Let’s have a look at some critical metrics for the stock that aren’t included previously.
| Particulars | Force Motors | Olectra Greentech |
|---|---|---|
| CMP | ₹ 3,352.35 | ₹ 1,087.4 |
| Market Cap (Cr.) | ₹ 4,644.7 | ₹ 8,866.36 Cr |
| EPS | 166.06 | 8.17 |
| Stock P/E | 22.66 | 137.63 |
| RoE | 7.38 % | 8.27 % |
| RoCE | 12.07 % | 13.3 % |
| Price to Book Value | 2.55 | 10.73 |
| Promoter Holding | 61.63 | 50.02% |
In Conclusion
From our comparative study of Force Motors Vs Olectra Greentech, we can come to the conclusion that, though Force Motors is a bigger company than Olectra Greentech, Olectra Greentech has grown at a better pace than Force Motors in terms of revenues and profits.
Which of the two stocks do you think is superior? What can investors anticipate from both firms in the future? Share your thoughts in the comments section below.
Written By Aaron Vas
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