IGI Logo

Shakti Pumps (India) Ltd. (SPIL) delivered a stellar performance in Q4FY25 and FY25, driven by robust execution under the KUSUM scheme, strong export momentum, and significant improvements in operational efficiencies leading to margin expansion, this led to a Revenue/EBITDA/PAT growth of 83.6%/168%/188% respectively. The company benefits from a strong order book of Rs. 1650 Crs and expects substantial order inflow from various other states including Madhya Pradesh and Punjab. Going ahead, profitability is expected to remain healthy with sustained order flow and the potential benefits from backward integration into solar cell manufacturing. We maintain BUY recommendation with a revised TP of INR 1,239, based on a PE(x) multiple of 25x on FY27E EPS.

Solar EPC Leads Growth, Export Contribution Steady: The company installed 71,572 solar pumps directly in FY25, generating a revenue of 1,939 crore for the year. Q4 alone saw the installation of 18,749 pumps with a revenue of 496 crore. The export segment contributed 437 crore in FY25, with 125 crore in Q4, maintaining a contribution of approximately 17-20% to the overall revenue. The company has discontinued its OEM supply and is focusing on direct participation in government schemes. SHAKTI maintains its strategic focus on the solar pump segment to drive strong double-digit growth in its overall portfolio. FY26 Outlook and Strategic Initiatives: The management has provided a positive outlook for FY26, guiding for 3,000 Crore+ in revenues with a sustained EBITDA margin of 24%. This ambitious target is supported by several key strategic initiatives:

Backward Integration into Solar Cells: The company is pursuing backward integration with the establishment of a 2 GW solar cell manufacturing plant. Land for this facility has already been allotted by the Madhya Pradesh government, and the project is currently in the planning stage, with funding to be partly met through recent QIP proceeds. The primary rationale is to ensure supply security and gain better control over costs for DCR solar cells, which are critical for KUSUM projects and are currently procured from external vendors at higher prices

• Capacity Enhancements: VFD (Variable Frequency Drive) manufacturing capacity has been successfully doubled to 4 lakh units per annum. Structure manufacturing capabilities have also been enhanced to support the increased scale of pump installations.

• Diversification into EV Components: Leveraging its established expertise in motors and electronics, SPIL has made a strategic foray into the Electric Vehicle (EV) components market, including the manufacturing of motors, chargers, and controllers. Production in this new segment has already commenced, with revenue contributions anticipated to begin from Q2FY26, opening up a new high-growth avenue for the company

Key Monitorables:

• Order inflow and execution progress under the KUSUM scheme across various states.

• Ramp-up and revenue contribution from the EV components business.

• Progress and timelines for the establishment of the solar cell manufacturing facility.

• Growth in export market.

• Overall macroeconomic environment and government policies related to the renewable energy sector

Outlook & Valuation:

The structural story of Shakti Pumps remains intact, backed by export growth, domestic expansion beyond subsidy schemes, and diversification into new energy solutions. We expect a Revenue/ EBITDA/PAT CAGR growth of 23.7%/ 21.7%/ 20.8% for FY25-27. While the FY25 performance is encouraging and the FY26 outlook is positive, we remain cautiously optimistic in our valuation. Our current PE multiple of 25x on FY27E EPS reflects a need for further evidence of consistent and widespread KUSUM scheme adoption across various states. We believe that a broader pickup in the KUSUM scheme beyond the currently strong performing states will be a key catalyst for further re-rating of the stock. We maintain our BUY recommendation with a revised Target Price of INR 1,239.

Please refer disclaimer at http://www.aretesecurities.com/

SEBI Regn. No.: INM0000127