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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.
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