Shakti Pumps - Healthy Order Book, Promising Pipeline Provides Vast Opportunity: IDBI Capital

IDBI Capital Report

Key Highlights and Investment Rationale

Healthy order book and promising pipeline:

Shakti Pumps India Ltd. has order book of Rs 9 billion (one time FY23 revenue) out of which two large orders constitute Rs 6.5 billion and the rest being the Uganda and other orders. Orders are to be typically executed in 90 days. The company expects another large tender of 50,000 pumps (~Rs 16 billion) from HAREDA in the next four-six months out of which it expects to garner a sizeable chunk of orders of 40-50%. With around 4 million (~Rs 1.3 trillion) solar pumps to be installed in next five years, order pipeline looks promising.

Head room for growth:

Shakti Pumps with capacity of 500,000 pumps is operating at utilisation of 40%. Present capacity is adequate for annual revenue of Rs 25 billion, which is 2.5 times of FY23 revenue. With a strong market share of 30% plus, 40% utilisation levels along with strong emphasis on the ground level execution of the PM-KUSUM scheme, Shakti Pumps sees headroom for growth ahead.

Company has guided for revenue of Rs 12 billion (up 24% YoY) for FY24E with improvement in Ebitda margin to 12-15%. (FY23 margin was 7%).

About the company

• Incorporated in 1982 and led by Mr. Dinesh Patidar, Shakti Pumps has established a solid presence in the pumps industry. The company is a pioneer in manufacturing 100% energy efficient stainless-steel submersible solar pumps and motors.

• Shakti Pumps holds a dominant position with ~30% plus market share in the domestic solar pump market under the PM KUSUM scheme. The company has a manufacturing facility of 500,000 pumps located at Pithampur (Madhya Pradesh), well supported by advanced in-house research and development and robust backend support.

• The company has a wide range of products having varied applications, offering more than 1,200 product variants. The products have varied applications from agricultural, building services, power, oil and gas, metals and mining and others.

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