Shakti Pumps (India) Limited (531431) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '24 and Full Year FY '24 Earnings Conference Call of Shakti Pumps (India) Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Anand from Ernst & Young LLP. Thank you, and over to you, Mr. Anand.

Good afternoon, everyone. Before we proceed, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our businesses that could cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. To take us forward through the financial results and the key developments and to answer your question today, we have the senior management of Shakti Pumps (India) Limited, represented by Mr. Dinesh Patidar, Chairman; Mr. Ramesh Patidar, Managing Director; Mr. Dinesh Patel, Chief Financial Officer; and Mr. Ravi Patidar, CS and Compliance Officer. We will start the call with a brief overview of the past quarter and full year FY '24 by Mr. Dinesh Patidar, followed by a Q&A session. I will now hand over the call to Mr. Patidar. Over to you, sir.

[Foreign Language] Thank you.

Thank you, sir. Good afternoon, everyone. During the Q4 FY '24, our company witnessed an impressive revenue growth of 233.6% compared to the same period in the previous year, [ rocketing ] to INR 609.3 crore from INR 182.7 crores. The EBITDA soared to INR 130.7 crores, a significant increase from INR 10.9 crores in the corresponding quarter of the previous year, multiplying twelvefold. We achieved an EBITDA margin of 21.5%, a notable rise from the previous year's 6%, thanks to the benefit of scale and accelerated execution rate as we move forward and anticipate -- we anticipate the EBITDA margin to stabilize at around 14% to 15% at an annual level, in line with our ongoing strategy for sustained growth. The profit after tax paid for Q4 '24 marked an extraordinary jump to INR 89.7 crores from INR 2.2 crores reported in Q4 FY '23. [Technical Difficulty]

Sorry to interrupt, sir, your voice is breaking. Let me connect you again, sir.

So is it connecting? Should I rejoin?

No, no. Sir, I will connect you again. I will disconnect and connect you again. Hold on, sir. [Technical Difficulty] Management has been connected. Sir, please go ahead.

Okay. So the profit after tax paid for Q4 FY '24, margin extraordinarily jumped to INR 89.7 crores from INR 2.2 crores reported in Q4 FY '23, showcasing a robust year-over-year basis increase. The PAT margin for Q4 FY '24 stood at 14.7%, a substantial improvement from 1.2% in Q4 FY '23. For the full year of FY '24, the company registered a 41.7% year-on-year increase in revenue, reaching to INR 1,371 crores, up from INR 968 crores in FY '23. Revenue from government projects increased by 51.7% year-on-year basis to INR 945 crores, while export revenue reached to INR 286 crores, up by 23% year-on-year basis. Our EBITDA for the full year stood at an impressive INR 224.8 crores, marking a significant improvement of 237.8% from INR 66.6 crores in FY '23. Additionally, the EBITDA margin for the year was strengthened by 952 basis points to 16.4% compared to 6.9% in FY '23. The profit after tax for FY '24 increased significantly by 487.2% year-on-year basis to INR 141.7 crores, up from INR 24.1 crores in FY '23. Simultaneously, the PAT margin expanded by 784 basis points to 10.3% for FY '24 from 2.5% in the previous year. These exceptional results are a testament to our commitment to driving sustainable growth and creating long-term value for our stakeholders. In light of these performance, company's net worth has enhanced to around INR 756 crores at the end of FY '24, with the interest coverage ratio strengthening from 3.58 in FY '23 to a robust 11.58 in FY '24. Notably, our working capital cycle has seen an [indiscernible], reflecting a substantial portion of our Q4 revenue is still pending recognition in our books. Return on capital employed, ROCE, has risen to 24.5% from 9.8% in FY '23. And return on equity has also improved, moving up from 5.8% in FY '23 to 18.8% in FY '24. With this now, I request the moderator to open the floor for question and answer. Thank you.

[Operator Instructions] The first question is from the line of Deepak [indiscernible] Seven Investment.

Vishal here, and congratulations for a great set of numbers. Sir, [Foreign Language]. First on this margin improvement. We have seen some phenomenal improvement for this quarter. Sir, can you bifurcate how much of this benefit has come from raw materials? How much has come from the scale, and how much has come from mixed [indiscernible]?

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[Foreign Language] So are there other similar scenario pending [indiscernible] or raw material pricing. [Foreign Language].

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[Operator Instructions] The next question is from the line of Balasubramanian from Arihant Capital.

Congratulations for a good set of numbers. Sir, this order book of INR 2,400 crores, what would be the execution timeline? And are we getting any advanced mobilization for just these executing the orders?

[Foreign Language]

Okay, sir. Sir, the second question. Sir, we have raised over INR 200 crore growth QIP. So what kind of incremental capacities we can expect on the pumps, motors and inverters and [indiscernible] side?

[Foreign Language]

Okay, sir. Sir, any order pipelines are coming up? Are we facing any slowdown because of these elections? What kind of order pipelines we have? And on the exports brand, we are keeping around 20% export side. What kind of opportunity we can see over the next 2 to 3 years?

Ramesh [Foreign Language]

[Foreign Language]

So on the order pipelines, sir?

Sorry?

So on the order pipelines. What kind of order pipelines we have in this year?

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The next question is from the line of Aashish from InvesQ.

[Foreign Language]. So I had a few questions on that. [Foreign Language]. So -- and still, we are counting that in opportunity size. [Foreign Language]. Are we competent enough to gain that kind of market share that we have in the overall 25%? [Foreign Language] Is the government going to give around INR 90,000 crores of subsidy in these [indiscernible] 5 years when this is executed? [Foreign Language] it will help us. [Foreign Language] So are we learning for this kind of number? Or am I miscalculating things here?

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Next question is from the line of Deepak Poddar from Sapphire Capital.

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Yes. [Foreign Language] we can target it to be at INR 3,000, INR 3,500 something by FY '25 end?

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90 to 120 days.

90 to 120 days for the remaining order. [Foreign Language] Because of the election, do you see any impact in coming quarters?

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Or seasonally, why is second half the best rate?

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All the very best to you.

Thank you, Deepak. Thank you very much.

The next question is from the line of Khushbu Gandhi from Share India Securities.

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And sir, secondly, [Foreign Language] margin improved here because of better capacity on margin improvement. Sir, your capacity improvement [Foreign Language] so at least not 21%, but 18%, 19% on quarter 4?

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The next question is from the line of Mehul Mehta from Nuvama.

[Foreign Language]

There is quite disturbance and your voice is breaking. The next question is from the line of Harshil Solanki from Equitree Capital.

Sir, 2 questions [Foreign Language]

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Okay. So sir, [Foreign Language]

[Foreign Language].

Okay. Sir, can you please repeat the numbers?

Yes. INR 60 crores, UP; Haryana, INR 257 crores; Odisha, INR 7 crores; Maharashtra, INR 112 crores; Rajasthan, INR 37 crores.

Okay. So sir, order book [Foreign Language]

Harshil, [Foreign Language]

[Foreign Language], Dinesh Patel, right.

Okay, no issues. Sir, second question [Foreign Language]

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A ballpark number [Foreign Language]

A total INR 250 crores project.

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The next question is from the line of Ajay Kumar Surya from Niveshaay.

Sir, congratulations for a good set of numbers. [Foreign Language]

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Going forward [Foreign Language]

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Okay. Sir, last question. [Foreign Language]

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Sir, last question. Sir, raw materials towards your contractor with [Foreign Language]

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Sir, [Foreign Language]

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All the very best for the future.

Thank you, Ajay. Thank you.

The next question is from the line of Mehul Mehta from Nuvama.

Team, am I audible this time? [Foreign Language] so should we expect you believe in under-promising and over -- I mean outperforming?

Mehul, [Foreign Language]

[Foreign Language] So is it that like because of like the -- I mean, we are gaining market share or others are moving out because we are the most integrated. So is that giving us an edge compared to others?

[Foreign Language]

So this [indiscernible] basically like which we talk about drives, like, it is one of our strengths kind of. Can we look at like that going forward [Foreign Language] because even states who are executing this, then maybe with having confidence in you, can we think [Foreign Language] market share, like we can increase it?

Mehul, [Foreign Language]

Mehul bhai, [Foreign Language]

[Foreign Language] And even on EV side, too, when we are thinking, because if you can update on what customers kind of -- if you can share anything like which we have added and like how we're looking at on EV business?

[Foreign Language]

Sure. Sure. So maybe a couple of years, like maybe there's growth. KUSUM will be doing growth and post that like an EV will take. So both engines will start working. Can we expect that?

Yes. Right, right, right.

The next question is from the line of Ketan in from RoboCapital.

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It's around INR 15,000. [Foreign Language]

FY '25, FY '26 [Foreign Language]

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Okay, okay. Or just 2 confirmations. [Foreign Language]

Right.

Raw material [Foreign Language]

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The next question is from the line of Arpit Shah from Stallion Asset.

Am I audible? Just wanted to understand [Foreign Language]

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Right. Perfectly right.

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Sir, 30% margin [Foreign Language]

Right, sir, right.

Okay. Okay. So [Foreign Language]

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Got it. [Foreign Language]

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Market share is 26% [Foreign Language]

Incrementally, [Foreign Language]

Actually, sir, [Foreign Language]

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Yes, yes. [Foreign Language]

The next question is from the line of Pritesh Chheda from Lucky Investments.

Sir, I just wanted to check the -- how many players in the solar pump side have their own variable frequency rate?

[Foreign Language]

So in the 75% market share that the other players have, do they use imported frequency drive? Do they have -- do they get it from India? How is it?

Basically, [Foreign Language]

So as of now, everyone is assembling imported or using imported. That's how it is, right? Other than you -- you're having your own frequency drive?

Right, right. [Foreign Language]

And do you sell frequency drive to any of the pump manufacturer?

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So you don't supply pump, neither do you supply frequency drive to any of the other guys?

Right now, right now. [Foreign Language]

Ladies and gentlemen, due to the time constraint, we will take this as the last question. I would now like to hand the conference over to Mr. Dinesh Patidar for closing comments.

Thank you. [Foreign Language]

On behalf of Shakti Pumps (India) Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.