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

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call hosted by 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, sir.

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 business risks that could cause future result performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. To take us through the financial results and developments and to answer your questions today, we have the senior management of Shakti Pumps (India) Limited, represented by Mr. Dinesh Patidar, Chairman; Mr. Ramakrishna Sataluri, CEO, Shakti Energy Solutions Limited; Mr. Dinesh Patel, CFO; and Mr. Ravi Patidar, CS & Compliance Officer. We will start the call with brief overview of past quarter by Mr. Dinesh Patel. I will now hand over the call to Mr. Patel, our CFO. Over to you, sir.

Thank you, Rohit. Good afternoon, everyone, and thank you for joining us today. It is my pleasure to welcome you to our Q1 FY '26 earnings call. We have begun the current financial year on a strong note, reflecting the strength and resilience of our diversified business model and disciplined execution. Our growth this quarter has been driven by robust performance in the solar pump segment, strong momentum in the export market and the strategic investment in capacity and technology. We continue to lead the solar pump business, maintaining approximately 25% market share across key states. As of 1st August 2025, our order book stood at approximately INR 1,350 crores, supported by steady inflows and active participations in tenders across Maharashtra, Madhya Pradesh, Rajasthan, Haryana, Punjab, Uttar Pradesh, Jharkhand, et cetera. We are now seeing decisive action from the central government, which is working closely with states to accelerate implementation. We believe this will unlock substantial opportunity with meaningful order inflows, and we remain confident in our ability to maintain leadership position while being selective in the orders we pursue. On the export front, while executing marquee projects globally, we continue to deliver strong results with around 25% CAGR over the past 4 years, and having delivered successful projects in Uganda, Bangladesh, Nepal, Haiti, et cetera. With the growing demand for our products in U.S.A., Middle East and Africa, we remain confident in our ability to sustain our growth in exports. We are witnessing good traction in our emerging business, such as solar rooftop, motor and controller for EV segment and the retail business for solar pumps. We remain confident about the opportunity in the solar rooftop business, driven by government initiatives such as PM Surya Ghar: Muft Bijli Yojana. In the solar rooftop space, we have initiated business in the states of Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh. I'm happy to share that Mr. Ramakrishna Sataluri, who leads this vertical, will share his thoughts later on, on our progress and outlook for this business. Mr. Ramakrishna's longest and most impactful tenure was at Tata Power Solar Systems Limited, where he served as Executive Vice President and later Chief, Product and Marketing. He also chaired the Board of Directors of TP Renewable Microgrids Limited, demonstrating his leadership in renewable energy initiatives and product innovation. With his deep understanding of business strategy and renewable energy market, Ramakrishna will lead SESL in its next phase of growth, focusing on innovation, operational excellence and strengthening our market position. Let me discuss now about our EV business. We have also witnessed good traction in the EV business, where we are receiving increasing inquiries and are undergoing trials. Our efforts towards the solar pumps retail business also continue as we now have more than 100 exclusive outlets in key locations. Our products are well accepted, and we are working to reduce dependency on government programs by growing our nongovernment business. We are also investing in the future. And for the same, we are executing a CapEx plan of INR 1,700 crores over the next 2 years. We had announced last year that we are doubling our capacity for pump and motors, solar structures and VFD and inverters. I'm happy to share that our solar structure capacity has already increased from 1 lakh per annum to 2 lakh per annum and the VFD and inverter capacity has increased from 2 lakhs per annum to 4 lakh per annum. We are also in the process of stabilizing an EV motor controller and charger facility under our wholly-owned subsidiary, Shakti EV Mobility, with an annual capacity of 2 lakh motors and 2 lakh controllers and chargers, which will require a total CapEx of INR 250 crores. In addition to this, we are also initiating the process to set up a 2.2 giga solar DCR cell and PV module plant in Pithampur, Madhya Pradesh. This requiring a total CapEx of INR 1,200 crores. We successfully raised INR 2,926 million through a QIP, which will partially fund our solar DCR cell and solar PV module manufacturing project. The balance CapEx will be financed through internal accruals and debt. These investments will enhance our manufacturing capabilities, improve integration and support long-term growth. With a strong foundation, disciplined execution and a clear strategic road map, we are confident in delivering around 25% to 30% revenue growth in FY '26, and sustaining this trajectory over the next 3 to 4 years. The opportunity ahead is immense, and we are taking the right steps to build a strong, diversified and future-ready business that delivers long-term value to all our stakeholders. Now let me talk you all through the financial performance for Q1 FY '26. Revenue for the quarter stood at INR 623 crores, reflecting a year-on-year growth of 10% compared to INR 568 crores in Q1 FY '25. EBITDA came in at INR 144 crores, up from INR 136 crores in the same quarter last year with an EBITDA margin of 23.1%. Profit after tax for the quarter was INR 97 crores, an increase from INR 93 crores in Q1 FY '25. During the quarter, India Ratings and Research Private Limited upgraded the company's credit rating to AA-. Now I would like to request Mr. Ramakrishna Sataluri ji to share the developments and outlook for the solar rooftop business. Thank you.

Thank you very much, Mr. Dinesh Patel. Good day to everyone. I'm Ramakrishna Sataluri, and I'm extremely delighted to be here to lead the rooftop business for Shakti Energy Solutions. This in India is seeing a significant growth. All of us are fully aware of the PM Surya Ghar: Muft Bijli Yojana, where the government is looking at solarizing 1 crore rooftops. It's got a very rapid pace. We have almost 58 lakh applications that have already been received by the government and in excess of 10 lakh installations already done. The speed is picking up and the opportunity is immense there. I'm looking forward to leading this and doing good business here with a clear vision that by 2030, we will be the market leader in this space. I bring to the table about more than 30 years of experience, really breaking it down into 3 large sectors, office automation, telecom and, lastly, as Dinesh said, in renewable space. 20 years of my working career has been with the Tata Group, and it's been immensely enriching. I now open the floor for some questions. Thank you.

[Operator Instructions] The first question is from the line of Aashish Upganlawar from Invest PMS.

So I wanted to understand because the order book has been continuously going down if we look at numbers for the past 3, 4 quarters. So if you can elaborate on how things are going at the government's end, central, state, and what's the outlook on the order book, because we understand that efforts are there from the government side and from the industry side to perk up the kind of tenders and orders wherever -- but it's not reflecting in terms of awards and improvement in our order book. So [Foreign Language] if you could please help us understand. That will be the first question for me.

Okay. Aashish. Yes, this is very clear. This scheme is very good and going to be in big way. And Aashish, solar business is taking some time to install and installations. And this order book -- our order book is already, yes, it is very -- 2 quarters is enough for our business. [Foreign Language].

[Foreign Language].

Yes, Aashish, [Foreign Language].

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[Operator Instructions] The next question is from the line of Abhinav Kapadia from Choice Equity Broking.

My question is on the lines of the cost of materials consumed. So if you see that this quarter, there has been a slight increase in the cost of materials that we have consumed. Any particular reason for the same? And where do we see that going forward?

Abhinav, [Foreign Language].

And sir, my second question is from the line of the EV mobility business. So have we had any order book for that or any execution? Because last quarter, I believe that we had said that, that has not picked up.

[Foreign Language].

The next question is from the line of CA Garvit Goyal from Nvest Analytics Advisory LLP.

Sir, my question is on the fundraise part. Like we raised money via QIP recently. And now we are looking to borrow also. I think we approved a limit for borrowing. So I want to just understand what is the perspective behind this? Like what is the management thinking while raising the money via QIP and while making the significant amount by borrowing. So what are the plans that we are looking for? So that's my first question, sir.

Okay. So there is -- actually, we have already said that there is a plan of INR 1,200 crores of CapEx in SESL for DCR cell manufacturing and PV modules. So we are funding through equity for 33%, which is minimum requirement of the bank for the loan. And remaining part will be funded through our internal equity and debt. So that is the plan for this increase in the debt. And that is only -- approvals from the shareholders, that is the only requirement. We are much confident that we are generating EBITDA every quarter at a much higher level. So we will be more concerned on the debt portion, and we are minimizing it, and we are expecting that we will take minimum loan and execute this project on time line.

Okay. And regarding the order book part, like order book is obviously on the decreasing side quarter-over-quarter despite the confidence the management is showing regarding the order inflows. So my question is like till now we are saying about 25%, 30% growth for this year, but this quarter was kind of muted for us, right? So I want to understand what is the plan for next 9 months? What is giving us the confidence that we will be able to do 25%, 30% growth this year? And secondly, on the margin side, do you see like we will be able to do the similar margins that we did in FY '25 for full year FY '26?

Okay. Yes. See, quarter-on-quarter growth, you will see this, [Foreign Language].

[Foreign Language] like we will be seeing more than 20% to 30% growth in next 9 months?

Yes, yes, [Foreign Language].

[Foreign Language] we used to give the guidance for next quarter. So what is the guidance for Q2 this time?

Actually, we are targeting for our yearly target and which is INR 3,000 crores for this -- last con call sir already said, and we are maintaining that we will do a 25% to 30% growth on a year-on-year basis, and we are maintaining 24% EBITDA year-on-year basis.

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The next question is from the line of Aditya Sahu from HDFC Securities.

I had 2 questions, one of which was what would be the overall scope of the KUSUM 2 in terms of the total orders that you're expecting in the KUSUM 2?

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Okay. [Foreign Language].

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Okay. Okay. [Foreign Language].

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Understood. [Foreign Language].

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The next question is from the line of Rajesh Vora from Jainmay Venture.

[Foreign Language].

Currently, we are working at around 60% capacity. And for solar business, we have sold out around 17,500 units that amounts to around INR 452 crores, for this quarter.

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INR 99 crores.

Okay. And my second question is to Mr. Ramakrishna. Very interesting to see that Shakti Pumps is taking initiative on rooftop business. You said that FY '30, Shakti wants to be #1 in the rooftop market. So can you elaborate a little bit on the strategy and how you plan to get there?

Yes. One, we have a clear vision of getting to market leadership by 2030. What we are doing right now is, keeping that as a vision, now we are working backwards as to how we're going to get there. We are now getting into the minute details of every data point and putting the strategy and the business plans together, which we will share in due course of action.

And when you say #1, do you mean currently #1, of course, is your previous company with 13% market share. So is it fair to say that we are looking at double-digit market share by then?

Whatever it takes to be the market leader. If it is double digit, so be it.

The next question is from Nikhil Abhyankar from UTI Mutual Fund.

I've got just one question. Sir, in the recent tenders, we have seen that the realizations are coming off. I mean, [indiscernible] tender has gone for INR 2.5 lakhs, whereas average realization last year was INR 2.7-odd lakhs. So in this scenario, how do you really expect to maintain the margins at current level? And are you actually seeing some kind of moderation in module costs for you?

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