This small-cap stock is engaged in the manufacturing of various types of pumps and motors. It also offers advanced water pumping solutions for diverse applications, including irrigation, horticulture, domestic water supply, and commercial and industrial uses. The stock is in focus on plans to raise QIP.
Stock Price Movement
With a market capitalization of Rs. 12,547.58 crores, the shares of Shakti Pumps (India) Limited’s stock surged by 5 percent, reaching an upper circuit of Rs. 1153.60 per share on Thursday, up from its previous closing price of Rs. 1098.7 per share.
Since then, the stock is currently trading at a lower circuit of 5 percent at Rs. 1043.80 per equity share. Over the last year, the company has given a massive return of 514 percent.
What Happened
Shakti Pumps (India) Limited has informed that a board meeting will be held on January 7, 2025, to consider raising funds through various methods, including preferential allotment, QIP, or public equity issue. The meeting will also address revised terms for the Treasury Committee, postal ballot procedures, and authorizations for managing the process.
Order Book and Capacity Expansion
Shakti Pumps (India) Limited has an outstanding order book of Rs. 1,800 crore as of September 2024. With existing capacity sufficient for Rs. 2,500 crore in revenue, the company plans additional expansions. New machines will be added within 3 months to enhance capacity, targeting potential revenue of Rs. 3,000 to Rs. 3,200 crore.
Margins and Cost Structure
Shakti Pumps (India) Limited is confident in maintaining current margins, supported by stable raw material prices such as copper, stainless steel, and solar panels. The company expects gross margins to remain between 35%-40%, with EBITDA margins guided at a minimum of 16%-18%, as per board decisions.
New Developments and Strategic Initiatives
Shakti Pumps (India) Limited is expanding its presence in the retail sector and exploring growth in exports and the solar market, targeting a 4.5 crore grid-connected pump opportunity in India.
The company is also venturing into the electric vehicle (EV) sector, actively developing and testing EV motors to establish a leadership position in India’s growing EV market.
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Future Outlook
Shakti Pumps (India) Limited is optimistic about future growth, focusing on executing its existing order book and expanding capacity to meet rising demand.
The company is committed to quarterly updates, with a conservative revenue estimate of Rs. 500 crores for the next quarter, despite potential for higher revenues based on current performance trends.
Recent Quarter Results and Ratios
Shakti Pumps (India) Limited reported a significant increase in revenue, rising from Rs. 153 crore in Q2 FY24 to Rs. 635 crore in Q2 FY25, reflecting a growth of 315.03% YoY. The company’s net profit also surged by 1583.33%, from Rs. 6 crore in Q2 FY24 to Rs. 101 crore in Q2 FY25.
Over the last five years, Shakti Pumps (India) Limited has achieved a compound annual growth rate (CAGR) of 20.31% in revenue and 25.84% in net profit.
Regarding return ratios, the company’s return on capital employed (ROCE) and return on equity (ROE) are projected to be 31.4% and 24.2%, respectively. The company’s debt-to-equity ratio stands at 0.17, indicating it is almost debt-free. Shakti Pumps (India) Limited’s earnings per share (EPS) is expected to be Rs. 166.
Company Overview
Shakti Pumps (India) Limited manufactures diverse pump systems and motors, specializing in submersible, solar, centrifugal, and specialized pumps. The company serves sectors like agriculture, irrigation, and industrial processes, delivering water-pumping solutions to over 100 countries worldwide.
The company offers power irrigation systems, wastewater pumps, and solar-powered solutions for domestic and commercial markets.
Written By – NIkhil Naik
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