Asia Pacific Equity Research

17 August 2022

Gensol Engineering
Another challenger in India’s EV market? - Company
Visit Note

Gensol (Not Covered) hosted analysts and investors at their Chakan plant Indian Automobiles and Auto
earlier this month. Gensol (US$180mn market cap) started off as a solar parts
plant advisory and EPC company, and has diversified into the Electric Amyn Pirani AC
Vehicle (EV) leasing business. The promoter group of Gensol has also (91-22) 6157-3583
invested in the Gurugram based electric transport start-up BluSmart [email protected]
Bloomberg JPMA PIRANI <GO>
Mobility. In July 2022, Gensol announced plans to acquire a majority
Vibhav Zutshi, CFA
stake in a US based electric vehicle manufacturing start-up. Gensol will (91-22) 6157-3585
start manufacturing of three wheeled EVs (two-seater) for use in personal [email protected]
mobility, ride hailing and last mile mobility starting Oct-2022. The J.P. Morgan India Private Limited
prototypes developed have a different form factor (v. already existing
EVs), featuring a reverse trike concept (two wheels at the front and one at
the back). The company is positioning itself as the only EV player offering
personal mobility EVs at a highly competitive price range of Rs500-600K
(v. existing EVs at c.Rs1.5m). Gensol also plans to launch a new facility
for the manufacturing of compact cars (expected to commence in FY24)
with an expected capacity of 50K cars per annum.
 Gensol entering into the manufacturing of 3W personal and cargo EVs
starting Oct-2022; 4W manufacturing to commence in FY24. Gensol
indicated that they will be manufacturing 1.2K units a month starting Oct-2022
with deliveries commencing from Jan-2023. There will be three variants
including personal mobility (Brand X-PV), ride hailing (Brand X-Fleet) and
cargo vehicles for last mile delivery (Brand X-Cargo).
 Gensol is targeting overall revenues of Rs20.3bn in FY25 with 32%
EBITDA margin (v. FY22 Rs1.6bn and 13% margin). Gensol projects an
EBIT margin of 5%/13% in FY24E/25E for the EV manufacturing business at
revenues of Rs3.9bn/6.7bn. The EV lease business is expected to generate top
line of Rs1.9bn/3.8bn in FY24/25E, with EBIT margins of 50%/64% (v. 12%/-
23% in FY21/22).
 Gensol estimates TAM of 900K units annually (FY30) for Passenger and
519K for Cargo EVs. Within the Passenger segment, Gensol estimates TAM of
674K/234K units for personal mobility/ride sharing, representing 18%/6% of the
total PV sales in FY30. They estimate TAM for the Cargo segment to be 519K
units per annum (388K for 3W and 131K for 4W LGV).
 Current industry EV penetration levels. As per the Vahan database, the
current EV 3W (excl e-rickshaw) penetration is trending between 7-9% in recent
months. PV EV penetration is at ~1% with TTMT at a 87% share. EV volumes
in LCVs are minimal. Diesel forms the lion’s share (73%) followed by CNG
(17%) and petrol (9%). However, OEMs like Tata Motors (Ace EV) and Omega
Seiki Mobility have launched models which should contribute to overall
increase in electrification.
NOTE: THIS DOCUMENT IS INTENDED AS INFORMATION ONLY AND NOT AS
A RECOMMENDATION FOR ANY STOCK. IT CONTAINS FACTUAL
INFORMATION, OBTAINED BY THE ANALYST DURING MEETINGS WITH
MANAGEMENT. J.P. MORGAN DOES NOT COVER THIS COMPANY AND HAS
NO RATING ON THE STOCK.

See page 10 for analyst certification and important disclosures, including non-US analyst disclosures.
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Amyn Pirani Asia Pacific Equity Research
(91-22) 6157-3583 17 August 2022
[email protected]

Key snapshots
Gensol will focus on keeping the vehicle feature-rich. The passenger EV will be
fully air conditioned with several connected features and range of ~200km. They will
be targeting both the personal and fleet segment. The three-wheeled cargo EV will be
deployed for last mile connectivity with an expected capacity of 800kgs.

Figure 1: Gensol’s EV lease business financial projections Figure 2: Gensol’s EV manufacturing business financial projections
(company’s projections) (company’s projections)

Source: Company presentation dated Aug 6, 2022.

Source: Company presentation dated Aug 6, 2022.

EV leasing expected to be a high margin business. Gensol is currently generating

~Rs50mn revenue in this segment and has a target of Rs440mn in FY23 from ~5K
cars and 1K EV cargos. They have received a sanction of 3K EV cars from IREDA
(Rs2.67bn loan sanctioned) and an in principle approval for 5K EV cars and 1K EV
cargo as well. Gensol currently has 700+ cars (as of June 2022) and 3K+ cars on
lease are expected by FY23.

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Amyn Pirani Asia Pacific Equity Research
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Figure 3: Gensol’s Solar EPC business financial projections (company’s projections)

Source: Company presentation dated Aug 6, 2022.

Figure 4: Gensol’s expectations on upcoming models in EV Passenger Vehicles (not JPM expectations)

Source: Company presentation dated Aug 6, 2022.

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Figure 5: Gensol’s expectations on upcoming models in EV 3Ws and LCVs (not JPM expectations)

Source: Company presentation dated Aug 6, 2022.

Figure 6: Image of the Brand-X EV clicked by us at the plant

Source: J.P. Morgan.

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Figure 7: Image of the Brand-X Cargo EV clicked by us at the plant

Source: J.P. Morgan.

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(91-22) 6157-3583 17 August 2022
[email protected]

Passenger Vehicles EV data

PV EV volumes increased in Figure 8: EV passenger vehicles: monthly volumes
July 3,750 Total EV Volumes - PV
3,500
3,250
3,000
The trajectory of PV EV 2,750
volumes will be a key 2,500
2,250
monitorable as both 2,000
1,750
Maharashtra and Delhi's 1,500
1,250
state subsidies are over now 1,000
750
500
New launch momentum in 250
0
CY23-25 will drive the next
leg higher in PV EV
penetration Source: Vahan.

TTMT is the market leader Figure 9: EV passenger vehicles: quarterly market share
followed by MG Motor Tata Motors MG Motor Hyundai M&M Others
100%
9% 3%
90% 9% 8%
OEM participation in the PV 80% 20% 21% 24% 22%
30%
segment is still not 70% 29%
widespread though 2HFY23 60%
should see launches from 50%
89% 94%
M&M and MG Motor 40% 75%
87% 87%
73% 72% 72%
30% 65%
57%
20%
10%
0%
1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23TD

Source: Vahan.

PV EV penetration is Figure 10: EV passenger vehicles: share of EV sales in overall volumes

steadily increasing 1.5%
1.4% Share of PV EV Sales in total volumes
1.3%
1.2%
1.1%
1.0%
0.9%
0.8%
0.7%
0.6%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%

Source: Vahan.

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Three Wheeler EV data

Electrification in 3Ws has Figure 11: EV 3Ws (total): monthly volumes
been led mainly by E- 30,000
E-Rickshaw Volumes Non E-Rickshaw Volumes
rickshaws (mostly low speed 25,000
and lead acid)
20,000

15,000

10,000

5,000

Source: Vahan.

Non E-Rickshaw EV volumes Figure 12: EV 3Ws (excluding e-rickshaw): monthly volumes
are also growing steadily 2,000 Total EV 3W Volumes (excluding e-rickshaw)
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

Source: Vahan.

The EV 3W market is Figure 13: EV 3Ws (total): quarterly market share

Mahindra YC Electric Vehicle Saera Electric Champion Poly Dilli Electric Greaves Cotton
crowded and unorganized Vani Electric Thukral Electric Unique Int'l Piaggio Others
100%
with top 10 players holding
only ~40% market share. 80%
58% 59% 57% 57% 58%
This is due to the presence of 60%
61% 60% 64% 59% 63%

several smaller e-rickshaw

manufacturers and 40%
3%
importers 20%
6% 3%
5% 4%
5% 4%
4%
4%
5% 4%
5%
4%
5%
4%
5%
4%
6%
4%
5%
9%
10% 11% 10% 9% 9% 10% 10% 9% 8%
13% 9% 7% 6% 8% 7% 7% 8% 8% 8%
0%
1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23TD

Source: Vahan.

Figure 14: EV 3Ws (only e-rickshaw): quarterly market share

Mahindra YC Electric Vehicle Saera Electric Champion Poly Dilli Electric
Greaves Cotton Vani Electric Thukral Electric Unique Int'l Others
100%

80%
58% 61% 61% 64% 60% 60% 59% 59% 60% 64%
60%

40%
3%
6% 3% 4% 4% 5% 5% 4% 4% 4%
20% 6% 5% 4% 5% 5% 5% 6%
9% 4% 5% 6%
10% 11% 10% 10% 10% 10% 10% 9% 9%
12% 8% 6% 5% 6% 5% 6% 6% 6% 6%
0%
1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23TD

Source: Vahan.

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[email protected]

M&M and Piaggio have a Figure 15: EV 3Ws (non e-rickshaw): quarterly market share
dominant presence in the Mahindra Piaggio Atul Auto Omega Seiki Kinetic Green Others

non e-rickshaw market while 100%

90% 20% 20% 21%
Omega Seiki is gaining share 80%
24% 28% 31%
25%
33%
26% 25%

steadily 70% 4% 13% 10% 12%

14% 5%
60% 16% 4% 3% 6%
8% 2% 3%
31% 16%
We expect this segment to 50% 6% 2% 39%
27% 22%
8%
25%
drive the overall EV 3W 40%
6%
30%
growth in the medium term. 20% 46% 50%
56%
46% 48%
32% 32% 38%
M&M also launched its e- 10%
30% 29%

alfa Cargo E3W in Jan-22 0%

1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23TD

Source: Vahan.

EV penetration in 3Ws Figure 16: EV 3Ws: share of EV sales in overall volumes (including e-rickshaw)
(including e-rickshaw) is 65.0%
Share of EV Sales in total volumes (including e-rickshaw)
inching closer to the 60% 60.0%
55.0%
mark
50.0%
45.0%
However, the use case of the 40.0%
e-rickshaw (top speed 35.0%
<30kmph) is not necessarily 30.0%
25.0%
the same as the traditional
20.0%
ICE 3Ws 15.0%

Source: Vahan.

Excluding e-rickshaws, the Figure 17: EV 3Ws: share of EV sales in overall volumes (excluding e-rickshaw)
penetration of EVs in 3W is 10.0%
Share of EV Sales in total volumes (excluding e-rickshaw)
rising steadily, though July 9.0%
8.0%
saw a decline
7.0%
6.0%
We expect this share to 5.0%
increase further as ICE 4.0%
segment market leader Bajaj 3.0%
2.0%
has indicated an EV launch
1.0%
during FY23 and TVSL also 0.0%
has launch plans (2K
bookings from CESL)
Source: Vahan.

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[email protected]

LCV data
We note that EV penetration in light commercial vehicles is extremely low right
now. Per Vahan, FY22 witnessed only 1K volumes (registrations) which implies
0.3% penetration and the number remains low in FY23TD as well. Currently, the
share of fuel mix is ~73% for diesel, 9% for petrol and ~18% for CNG. In EV LCVs,
there are few players such as Tata Motors (ACE EV) and Omega Seiki, however
volumes are currently very low.

Electrification in LCVs Figure 18: LCV mix has been dominated by diesel, though petrol and CNG are forming a greater
remains very low as of now share of the pie. EV volumes are very low as of now
Diesel Petrol CNG EV Others
100% 5.0% 7.6%
90% 0.4% 19.0% 17.5%
9.4%
80% 9.1%
11.1%
70%
60%
50% 94.5%
40% 82.9%
69.6% 73.3%
30%
20%
10%
0%
FY20 FY21 FY22 FY23TD

Source: Vahan.

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Completed 17 Aug 2022 01:47 AM HKT Disseminated 17 Aug 2022 01:47 AM HKT