Shakti Pumps (India) Limited Q3 FY24 Earnings Conference Call Insights

Key highlights from Shakti Pumps (India) Limited (SHAKTIPUMP) Q3 FY24 Earnings Concall

• Financial Performance
  • Quarterly revenue was the highest ever at INR495.6 crores, up 57.7% from INR314.2 crores in Q3 FY23.
  • Strong export business with revenue of INR62.2 crores.
  • EBITDA for the quarter was INR71 crores against INR21.9 crores in Q3 FY23, increased by 224.2%.
  • EBITDA margin expanded to 14.3% from 7% in Q3 FY23.
  • PAT was INR45.2 crores, up 301% from INR11.2 crores, with PAT margin at 9.1%.
• Order Book
  • Current order book stands at INR2,250 crores to be completed in next 21 months.
  • Continues to receive new solar pump orders in addition to ongoing orders.
• R&D Developments
  • Filed key patent and received 11 approved patents to be utilized by the company.
  • Developing EV motors and controllers, with investment approval of INR13-16 crores.
  • Significant role in KUSUM scheme to install 20 lakh solar pumps by 2028.
  • Pilot project ongoing for component C to install 15 lakh solar pumps.
• Raw Material Price Stability
  • Prices like copper have stabilized over last 2-3 quarters.
  • Solar cell prices have also declined and stabilized.
  • One year fixed price contracts signed with solar manufacturers for supply.
• Market Size
  • Total target is 35 lakh pumps under KUSUM scheme, with 20 lakh in component B and 15 lakh in component C.
  • Launched turnkey Beautiful Homes service in 11 cities.
  • As of December 2022, over 12 lakh allotted to states, of which 2.8 lakh installed.
  • Company has 25-30% market share currently.
• Growth Guidance
  • Previous guidance of INR1,200 crores will be exceeded given current run-rate.
  • Q3 revenue was INR495 crores, will do over INR500 crores next quarter.
  • Expecting 25% growth next year to around INR1,600-1,700 crore revenue.
  • Sufficient capacity available without major expansion needed.
• Gross Margin Trajectory
  • Higher export sales diluted margins slightly in Q3 but offset by higher EBITDA.
  • Going forward, with increasing scale and stable input costs, expect gross margins to improve.
• Scheme Execution
  • Delayed execution in initial years.
  • Policy and pricing issues being resolved.
  • Current order book and results indicate better implementation ahead.
• Market Consolidation
  • Company has about 30% market share currently.
  • Fragmented market is now more consolidated.
  • Company well positioned for growth going forward.
• Margin Stability
  • Raw material price fluctuations handled through contracts.
  • Helped protect margins over last few quarters.
  • Expect margin stability to continue with increasing scale.
• Capacity/International Expansion
  • Looking to expand capacity from current INR2,500 crores.
  • Proposing QIP issue of INR200 crores for expansion.
  • Will support 25% growth guidance for next year.
  • INR5 crores sales done in Uganda in Q3.
  • Targeting INR5 million quarterly sales going forward.
• Export Outlook
  • Exports revenue at INR197 crores in 9M FY24.
  • Growth over INR166 crores exports last year.
• EV Business Plans
  • EV motor and controller production starting June 2024.
  • Targeting domestic and international markets.
  • Capacity planned for 2 lakh units annually.
  • Considering 4-wheeler segment also.