Industrials - Solar Pumps Sector Update :KUSUM 2.0 Delay Hits Realisation, Orders Slow Down by Choice Institutional Equities Ltd
KUSUM 2.0 Timeline
We earlier expected a Kusum 2.0 notification by the end of H1FY27E. We continue to maintain this timeline, despite successive slippages. We believe that the new scheme will improve realisation per pump and profit margin and bring greater clarity of the prospect of the solar pump industry.
Realisation and Cost Pressure Impact Margin
Supply constraint and disruption have boosted commodity price inflation in copper and steel, which has pressured margin. Alongside, aggressive bidding for limited state-orders has led to lower realisation per pump and further deterioration of margin. In this quarter, we revised our margin guidance downwards
State Participation Expected to Rise
Maharashtra's Magel Tyala and comparable state schemes have concentrated the full bidder pool into a small number of tenders and the resulting discovery has transferred bargaining power to the discom. We project the realisation for state schemes will only improve after the implementation of a new central government scheme.
Q2FY27E: Low Order Inflows Suggest a Subdued Quarter
The order inflow would remain state-led and realisation is anticipated to hold near Q1FY27E level, with the tender pipeline too narrow to restore pricing discipline. Margin expansion is unlikely in the absence of a central government scheme, and we would treat any Q2 improvement as mix-driven rather than structural.
Sector Stance: NEUTRAL
We retain our stance for the sector until clarity on policy emerges. Both, SKPI and OSWALPUM, remain rightly positioned for the solar pump sector. Ongoing backward integration initiatives and new orders from PM-Surya Ghar stave off degrowth.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
