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

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Earnings Conference Call hosted by Shakti Pumps (India) Limited. [Operator Instructions] 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 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 developments and to answer your 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; 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. Over to you, sir.

Thanks, Rohit. Good afternoon, everyone, and thank you for joining us on Shakti Pumps' Q1 FY '27 Earnings Call. We are pleased to share that the company has commenced FY '27 on a strong note, delivering yet another quarterly revenue and future building on the momentum witnessed in the previous quarter. Revenue for Q1 FY '27 grew by 37.9% year-on-year to INR 859 crores as compared to INR 623 crores in Q1 FY '26. This robust performance over performance was driven by strong operational execution, continued reason in our core solar phone business and sustained demand across key markets. The quarter's performance reflects the strength of our execution capabilities, our expanding market presence and the continued relevance of our solution in supporting India's renewable energy and agriculture infrastructure priorities. During the quarter, we achieved a strong momentum in solar pump installations with volume increasing by 57.6% year-on-year to 27,608 pumps in Q1 FY '27 compared to 17,557 pumps in Q1 FY '26. This growth was driven by a robust execution of existing orders, healthy demand under state-led programs and our continued ability to scale deployment efficiently across key markets. Our EBITDA margin remained broadly stable on a sequential basis at 9.6%. This performance highlights the resilience of our business model, the strength of our [indiscernible] capabilities and management's continued focus on driving profitable growth. On a corresponding basis, the margins remain under based due to the included raw material costs driven by the ongoing geopolitical situation as well as lower realization in some orders as highlighted in the previous quarter as well. We view these margins pressures as temporary and largely external in nature, rather than reflective of any [indiscernible] issue in the business. During Q1 FY '27, the company reported a PAT of INR [ 62 crores ], representing an increase of 35% over Q4 FY '20 despite revenues remaining broadly comparable on a subsequent basis, PAT margin improved to 6% in Q1 FY '27 from 4.5% in Q4 FY '26, reflecting disciplined cost management and profitability during the quarter. Our export business delivered a steady performance during the quarter despite the continued geopolitical uncertainties impacting global pay and demand conditions, these [indiscernible] reflect the strength of our prospect and leading market presence in key export markets. We continue to maintain a healthy and diversified order book of approximately INR 1,000 crores as on 22 July '26. We are witnessing increasing visibility around the PM KUSUM 2.0 scheme, along with growing [indiscernible] from other state-led programs, which give us confidence in sustaining our growth momentum. We believe these opportunities position us strongly to further consolidate our leadership in the solar pump business. While the solar pump business continued to remain our core growth engine, we are also parallelly building the next phase of Shakti Pumps growth journey, by diversifying into [indiscernible] and complementary businesses. Our emerging case and retail sales business is witnessing encouraging traction supported by the continued expansion of our [indiscernible] network in Q1 FY '27. This business recorded sales of INR 24 crores, listing a strong growth. Our solar [indiscernible] business is also progressing well, and Mr. Ramakrishna Sataluri will provide a more detailed update on this business shortly. In the EV business, we are currently in a trial out of phase with new customers, while this phase is inherently time taking, given the validation onboarding requirements. We remain optimistic about the long-term potential of this business and expect it to gain meaningful momentum over the coming periods. We continue to invest ahead of the demand curve to ensure that we are well positioned to capture the next phase of growth. This includes the ongoing capacity expansion across pumps, motors, [indiscernible] and solar specter, enabling us to extend our integrated manufacturing capabilities and support higher execution volume expected in future Additionally, our 500-megawatt [indiscernible] module facility and 2.2 gigawatt integrated is [indiscernible] projects remain on track, further reinforcing our [indiscernible] integration strategy. To conclude, we remain committed to pursuing strategic and disciplined approach to long-term growth while continuing to protect the extent of our balance sheet our expanding portfolio across the renewable energy sector, our ongoing investment to build future-ready capacities and increasing policy support from the government [indiscernible] us at a unique inflection point to deliver sustainable performance in the future. I now request Mr. Ramakrishna Sataluriji to share key development and the outlook of our Solar rooftop business. Thank you

Thank you. Thank you very much, Mr. Ramesh Patidar. The rooftop business in this quarter showed a healthy growth. We clocked in INR 8 crores revenue as compared to INR 2 crores on a like-for-like quarter. There's been very good response from the market about our inverters as we spoke about it earlier, too. Customers have got back to us and given us feedback that they are getting about 10% better generation with our inverters, which is a very good sign for us. We've taken the initiative to be a brand owner in the [indiscernible]. We have registered ourselves. The 500-megawatt plant is coming up and coming up fast. And with this, we will become the only fully integrated roof of service provider in the country, and this is similar to what we are for the pumps industry. The government is doing an excellent job. In the next phase, in consultations with various stakeholders, it's clear that the focus areas are quality, digitalization and customer experience by providing end-to-end warranty. The Shakti brand will largely benefit because of this, because this is what we focus on. And to quote our Chairman, "this is in the DNA of our business philosophy." I now open the call for questions. Thank you very much.

[Operator Instructions] The first question is from the line of Himanshu Shibhari from MD Investments.

My question is, can you give the update on PM KUSUM 2 and the payment-related issues that the company had and the sector has been seeing -- and there's been demand by farmers written request to the ministers for heavy pumps. Are we -- is there any notification from any sort of ministries to the company? And also, how is [indiscernible] impacting the demand structure of the company?

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The next question is from the line of Harshil Solanki from Equitree Capital.

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Okay. Okay. My last question is, sir, [Foreign Language]

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The next question is from the line of [ Pavan Kabi ] from Sequint Investments.

So can you hear me?

Yes, yes.

Sir, I just wanted to understand what's out of the INR 1,000 crore order book, how much is our rootop order?

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Understood, sir. [Foreign Language]

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The next question is from the line of [indiscernible] Mehra from Marwadi Shares and Finance Limited.

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[Operator Instructions] The next question is from the line of Prakhar Tibrewala from Choice Institutional Equities.

Congratulations on good set of numbers. [Foreign Language]

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The next question is from the line of Praveen Motwani from BOI MS.

Sir, just 1 question again on the margins front. Could you just give us some indication on the margin. So from the last 3 quarters, you have been doing 10-odd percent margin. So directionally, how do we see that as if we moving? And is that 10% is the bottom of the margins [ right now ] from here on, we should expect improvement, some directional numbers should help us.

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The next question is from the line of Ronak Agarwal from [indiscernible]

Yes. So the company indicated that backward integration will support the improvement in the margins over the next couple of years. However, by FY '28 is more and more clear will expand the capacity and competition increases. Do you think that the benefits from backward integration could be offset by a lower government under realization?

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So in the presentation, we've given that there is an order book of INR 1,000 crores, which is currently, [ which is the ] -- so should we expect that this order book will get executed by the end of Q2? Or is there any likelihood that the spillover can be there for the second half of this year?

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Sir, if you can give the order book of Q2 and Q3 and Q4 separately.

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So [Foreign Language] next 2 quarters [Foreign Language] we can approximately take INR 600 crores for Q2 and INR 400 crores for Q3. Am I right? Or there will be some...

No, no, sir. [Foreign Language]

Okay. Basically, INR 1,000 crores is the run rate on the upcoming next 2 quarters?

There is sufficient order book available for the next 2 quarters.

What we mean to say that current INR 1,000 crore order book, and there are a few orders which we are expected to come in some time. So that is also added to the current order book.

The next question is from the line of Keval Gala from [ Anzen ] Capital. Ladies and gentlemen, the line of the previous participant has been disconnected. We will move on to the next Maithli Shah from Sapphire Capital.

Congratulations on the results. Firstly, [ you guided ] INR 500 crore, revenue in the next 3 years. If you could help us with the business split that we're expecting [Foreign Language] rooftops eating the motors business to contribute in that? And how much are we expecting export to contribute?

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There is no kind of concrete idea of [Foreign Language]

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Yes.

The next question is from the line of [indiscernible] from [indiscernible] Asset Managers.

My voice is coming?

Yes.

Sir, sir, my question was that from last 2 quarters, our EBITDA margin has been around 10% and where our peer has been easily able to maintain the margin. So like in this -- what we are doing [ wrong ] like what other issues we are facing on it?

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