Shakti Pumps (India) Limited (531431) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY '26 Earnings Conference Call hosted by Shakti Pumps India Limited. [Operator Instructions] I now hand over the conference to Mr. Rohit Anand from EY. 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 results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. To take us forward to the financial results and developments and to answer our questions today, we have the senior management of Shakti Pumps India Limited, represented by Mr. Dinesh Patidar, Chairman; Mr. Ramesh Patidar, Managing Director; Mr. Ramakrishna Sataluri, CEO, Shakti Energy Solutions Limited; 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 by Mr. Ramesh Patidar, our Managing Director. I will now hand over the call to Mr. Ramesh Patidar, sir. Over to you, sir.

Thank you, Rohit. Good afternoon, everyone, and thank you for joining us on a Saturday. I'm pleased to welcome you to Shakti Pumps's earnings call for the third quarter and 9 months ended December 31, 2025. Let me start by saying that Q3 FY '26 was a quarter of deliberate and disciplined choice for us. While our reported financial performance for the quarter was below our earlier expectations, the actions we took were intentional, prudent and aimed at strengthening the company for the long term. During Q3, we consciously moderated execution, especially in Maharashtra to address elevated receivables level and protect balance sheet strength. As part of this approach, we temporarily paused execution of orders of approximately INR 200 crores. This decision resulted in lower revenue recognition and pressure on margins on both Q-o-Q and Y-o-Y basis. However, we wanted to clearly emphasize that this was a strategic decision, prioritizing cash flows and working capital discipline over short-term revenue growth. Margins during the quarter were also impacted by several factors. These included lower realization of around 4% in Magel Tyala orders of continued increase of around 2% in raw material prices, such as copper, steel and solar panels and higher employee cost. Additionally, we consumed some inventory that was procured in Q2 FY '26 when input prices were higher, which also impacted the margins. We also incurred a onetime manpower cost of INR 4.4 crores due to the implementation of the new labor code, along with investments in emerging businesses that are still in their buildup phase. Importantly, our working capital position has started to stabilize even with incremental revenue recognition during the quarter, trade receivables remained broadly stable compared to Q2 FY '26, reflecting improved collections and tighter execution disciplines, this give us confidence that the corrective steps taken are already showing results. We continue to maintain a strong diversified order book of approximately INR 2,100 crores with healthy representation across multiple states, including Maharashtra, Karnataka, Madhya Pradesh, Jharkhand, Uttar Pradesh and Haryana. Payments from Maharashtra have started improving following the release of funds by the Asian Infrastructure Investment Bank and the state government. The execution in the state has now resumed. Our entry into Karnataka with our first large order marks an important expansion into the southern region. The executions there will be closely aligned with the payment time lines. Our export business remained resilient, performing well during the quarter with the retail business reporting 25% Y-o-Y growth. Revenue from export business stood INR 307 crores in 9 months FY '26 and INR 105 crores in Q3 FY '26. We expect this segment to grow at a healthy pace for the full year, supported by the strong retail exports and expanding international opportunities. We also expect our export business to gain traction with the signing of trade agreements of India in major international markets like U.S.A., our major export market and also with the Europe. We also continue to see encouraging traction in emerging businesses. Case sales grew strongly during the 9-month period to INR 66.6 crores, a Y-o-Y growth of 68%. And our solar rooftop business is steadily expanding its dealer network, positioning it to become a meaningful contributor post commissioning of our DCR module capacity of 500 megawatts in Q1 FY '27. Looking ahead, we expect execution momentum to improve meaningful in Q4 '26, which we anticipate to be our highest revenue quarter ever, although some revenue may spill over into subsequent quarters. We aim to reach this close to our revenue guidance given for the full year FY '26. Our focus remains firmly on strengthening the balance sheet, disciplined execution and sustainable growth. In closing, we believe the steps we have taken during the quarter place Shakti Pumps on a much stronger footing, allowing us to capture upcoming opportunities while protecting long-term value for all stakeholders. Thank you for your continued trust and support. 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. Ramesh Patidar. We've had a very exciting set of actions in the quarter for the rooftop business. This being a new business that we are starting off, the focus isn't to look into the long term, but work on the basics at present. We spent a lot of time in building the infrastructure, the channel infrastructure for the business. We placed our products in the market to get feedback, and the feedback has been very positive. We also started a digital campaign speaking about our products, our strengths, the legacy of Shakti. That's been well received as well. And as Mr. Patidar just said, we are looking at some volumes coming in, in the next financial year once our module plant, the 500-megawatt module plant also comes up. I now open the floor for questions, please.

[Operator Instructions] The first question is from the line of Mahesh Bendre from LIC Mutual Fund.

Sir, this quarter was, I mean, unexpected one. So was that expected from your end? Or is it that the -- as quarter progressed, the situation become challenging in terms of execution?

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[Foreign Language] When we going to this quarter [Foreign Language]

Yes. Yes. [Foreign Language]

Okay. Okay. Sir, another thing is non-KUSUM business and export business.[Foreign Language] What was the contribution from this non-KUSUM and export business? Outlook [Foreign Language] going forward?

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Mahesh ji [Foreign Language]

Okay. Okay. And non-KUSUM business?

Non-KUSUM [Foreign Language]

Okay. Sir, last question from my end. I think we were doing two projects. One was backward integration project solar sale or -- I mean solar [Foreign Language] solar model and solar sale. And secondly, EV business, electric vehicle [Foreign Language] what is the time line for these two businesses [Foreign Language] ?

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

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KUSUM 2 [Foreign Language]

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Thank you Aashish.

The next question is from the line of [ Praveen Motwani ] from [ VOIMS ]

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Praveen [Foreign Language]

Okay. Okay. [Foreign Language]

Praveen, [Foreign Language]

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Okay. Okay. [Foreign Language]

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Okay. Got it. So you will give us a more clarity in Q1 of '27?

Yes.

Okay. Got it. Last question. If you can just help me to give some time line on the new businesses. Sorry, I missed your initial remarks sir? [Foreign Language]

[Foreign Language] so that is the update for the project. [Foreign Language]

The next question is from the line of Kamlesh Bagmar from Lotus Asset Managers.

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The next question is from the line of Nikunj Bhanushali from [indiscernible] Wealth.

[Foreign Language] so last quarter, our order book was at INR 1,300 crores and we received additional INR 1,900 crores order book. [Foreign Language] I think there's a gap of around INR 400 crores, INR 500 crores.

Yes. Yes. You rightly said. [Foreign Language]

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[Foreign Language] and the EV. From 2, 3 years point of view, how do you see the company growing? I mean [Foreign Language] And what are our targets right now? What direction we are moving? And what actions are we taking right now to achieve your goals.

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[Foreign Language] earlier we had guided in current financial year, approximately we want to cross INR 500 crores this year. So what are we expecting exports to be in this year and next year?

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The next question is from the line of Keval Gala from Navkar Investment.

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Okay. Okay. Last question [Foreign Language]

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The next question is from the line of Darshil Jhaveri from Crown Capital.

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The next question is from the line of Praveen Motwani from [indiscernible].

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Mr. Praveen are there on the line?

Yes. Yes. Am I audible now.

Yes sir. You are audible now.

[Foreign Language] for next couple of months [Foreign Language]

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The next question is from the line of Gaurav Shukla from Fin Investors.

Sir, am I audible.

Yes. Yes.

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Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand over the conference to Mr. Dinesh Patidar for closing comments. Over to you, sir.

Okay. Thank you very much. [Foreign Language] Thank you.

Thank you. 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.