As the world continues its shift towards electric vehicles (EVs), demand for EV infrastructure is growing rapidly. This presents a huge opportunity for companies involved in producing and distributing EV charging solutions. Particularly in the UK, where the government intends to ban sales of all new diesel and petrol vehicles by 2030. I believe these UK shares offer an excellent opportunity for me to gain a foothold in this high-growth industry.
Founded in 2009, Pod Point Group Holdings (LSE: PODP) is a UK-based company that provides electric vehicle (EV) charging solutions to customers in the UK and Europe. The company designs, manufactures, and installs a range of EV charging stations. This includes home chargers, workplace chargers, and public charging stations, with an emphasis on user-friendly products.
Before its IPO, Pod Point was acquired by EDF Energy in 2019. This facilitated an expansion of its enterprise-level operations, enabling a new line of services to commercial businesses to help manage their EV charging infrastructure. However, the company faces strong competition from other big market players. One such competitor is BP, which currently has over 7,000 charging points in the UK. Competition is particularly fierce in these commercial sectors, which is where Pod Point is currently seeing most of its growth.
After the stock debuted at 220p in November 2021, investors faced a difficult period. The share price dropped to ~50p after 12 months.
Since finding an apparent bottom at the end of last year, the price is now sitting at ~90p. This turnaround in investor confidence is partly due to robust financial performance during a difficult period, with the company posting revenue of £71.4m and 16% growth last year.
Pod Point is yet to find profitability. Consistent operating losses of ~£20m over the past few years have spooked some investors.
£74.1m of closing cash for 2022/23 offers a decent runway before new investment must be sought, and there are hopes that profitability will be achieved soon whilst maintaining double-digit growth.
However, caution should be advised. Whilst all signals point towards favourable attitudes from the UK government regarding EV solutions, this position could change at any time. Pod Point is therefore exposed to the directives of UK policy.
Looking to the future, Pod Point is well positioned to benefit from the growing demand for EV infrastructure in the UK and Europe. The company’s partnership with EDF Energy provides it with strong financial and operational backing, and its innovative charging solutions have been well received by customers. As EV adoption continues to grow, Pod Point’s expertise in charging infrastructure and software solutions makes it a key player in the EV ecosystem.
To buy or not to buy?
For me, the price-to-sales ratio of 1.95 looks very attractive for a company with high growth prospects in such a fertile industry. There is unilateral support across governments for stimulating growth in the green energy sector. This means that a broad spectrum of participants are hoping that companies such as Pod Point succeed. I am one of them. I bought some stock at the end of last week.