Shakti Pumps (India) Ltd Q4 FY25 Earnings Analysis

- Shakti Pumps is targeting a consistent growth of 25-30% year-on-year in revenue and volumes. - The company plans to execute a 1.2 GW solar cell plant to reduce dependency on external suppliers and support growth. - Current capacity utilization is about 62%, with internal expansions enabling INR 3,000-3,200 crores revenue in FY26; new capacity will come online in FY27. - The order book stands robust at INR 2,000 crores with potential to increase further for sustained growth. - Export business is growing strongly, contributing INR 312 crores in 9 months and showing better margins. - Growth is backed by increasing domestic demand in solar pumps, government schemes, and future opportunities in electric motors and EV segments. - The company aims to double business volume in the next 3 years despite current challenges in solar cell supply.

- Shakti Pumps targets a consistent year-on-year growth of 25-30% going forward. - For FY26, internal expansions and debottlenecking efforts aim to achieve revenues of INR 3,000-3,200 crores. - The company expects to maintain or improve EBITDA margins around 24%, with potential fluctuations due to raw material and exchange rate volatility. - PAT margins have expanded significantly and are expected to sustain around 16%-18%. - EPS has grown substantially, with INR 8.7 per share in Q3 FY25 and INR 24.8 per share for 9M FY25, showing strong upward trajectory. - Solar pump and EV segments, supported by increasing capacity (like 1.2 GW solar plant), are key drivers. - Export business is growing robustly, contributing better margins and supporting overall profitability. - Management emphasizes focusing on sustainable margin expansion despite input price pressures and supply challenges.

- Shakti Pumps is planning a capex of INR 400 crores through a QIP aimed at installing a solar module manufacturing plant, specifically a 1.2 gigawatt wafer-to-cell plant to address DCR cell supply issues (Pages 12, 19). - The solar cell plant is targeted to start operations in the next 2 to 2.5 years, reducing dependence on external suppliers and supporting future growth (Pages 16, 17). - Internal expansions and debottlenecking exercises are ongoing to increase capacity, enabling revenue targets of INR 3,000-3,200 crores for FY26 with new capacity additions expected in FY27 (Page 14). - The company is actively partnering with new and upcoming DCR cell manufacturers for better supply chain control and to sustain 25-30% growth rates (Pages 11, 18).

- Shakti Pumps has planned a Qualified Institutional Placement (QIP) to raise INR 400 crores. - The funds raised through QIP will primarily be used for installing a solar module manufacturing plant (solar cell plant with 1.2 GW capacity). - Details regarding total capex and the mix of equity and debt for this funding are yet to be disclosed and will be communicated later. - Currently, the company is debt-free with no term loans, and working capital utilization is moderate (around INR 200 crores). - The company is focused on reducing dependency on external DCR cell suppliers by installing its own capacity to support growth and mitigate supply chain risks.

- Current order book stands at approximately INR 2,070 crores as of Q3 FY25. - Major portion of orders: INR 750 crores from Maharashtra government, INR 116 crores from Haryana government, and remaining from Rajasthan and Uttar Pradesh. - Orders are executable within approximately three quarters (~INR 600 crores per quarter run rate). - The company can take additional orders of around INR 2,000 crores beyond the current order book. - Expected to maintain minimum 25% year-on-year growth in orders. - Order book includes quarterly build-up of about INR 800 crores in new orders. - New orders keep coming every quarter, and capacity tie-ups with DCR cell manufacturers support execution. - The company is confident about order growth to INR 3,000 to 3,500 crores in the coming periods with no issues in execution or payments.