Shakti Pumps (India) Ltd. (BSE‐531431, NSE Symbol‐SHAKTIPUMP), a pioneer in the energy-efficient stainless steel and submersible solar pumps and motor industry has announced that India Ratings and Research (Ind-Ra) has affirmed its bank facilities at ‘IND A’ with a Stable Outlook.
As per the rating agency the key rating drivers were:
· Established Market Position; Strong Distribution Network
Shakti Pumps has a strong market position in solar pumps under the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) scheme. Apart from catering to government orders from nine states under KUSUM, SPIL caters to non-KUSUM government orders sourced from Maharashtra and Chhattisgarh government entities.
It has a strong global footprint and is recognized as one of India’s most prominent pump exporters, selling submersible pumps to over 100 countries through more than 550 dealers and retailers. SPIL has an overall annual manufacturing capacity of 0.5 million units. Ind-Ra believes the company’s increased brand awareness and strong distribution network will continue to support its revenue growth by increasing its ability to cater to a wider customer base.
· Diversified Revenue Portfolio
Shakti Pumps has a well-diversified product portfolio, finding applications in agriculture, and residential & industrial sectors. During 9MFY23, the contribution from the agriculture segment increased to 70% of the revenues (FY22: 69%; FY21: 58%). Of the total orders from the agriculture segment during 9MFY23, about 90% was for KUSUM (FY22: 81%; FY21: 77%). The company operates in over 100 countries and has established three overseas subsidiaries to cater to the demand in these regions. During 9MFY23, exports contributed about 22% to the total revenues (FY22:16%; FY21: 19%).
· Strong Revenue Growth over FY22, Steady Revenue Profile in 9MFY23
During 9MFY23, Shakti Pumps recorded consolidated revenues of INR7,850 million which had grown 27% yoy in FY22 from FY21. The agency believes the revenues to be moderated in FY23, since the company has held back orders before a revision of the prices under the KUSUM scheme by the government. The company’s revenues grew at a CAGR of 23% over FY16-FY22. The government’s emphasis on promoting renewable energy continues to be a strong driver of its revenues. Under PM KUSUM Yojana, Solar Energy Corporation of India (SECI) issued new tenders for approximately 660,000 pumps in December 2022. Shakti Pumps is expecting to receive some orders from this tender by Q1FY24.
· Robust Credit Metrics:
The company does not have any heavy debt-funded capex plans for the past 4 years which has helped the company maintain robust credit metrics. According to the management, Shakti Pumps in FY22 had planned to invest about INR2,500 million over the next five years in its newly incorporated green subsidiary; of which INR100 million has been done in FY23. As per management, this investment will be completed through internal accruals. During 9MFY23, the annualised consolidated net leverage improved to about 0.58x (FY22: 0.86x; FY21: 0.6x; FY20: 15.2x), driven by substantial debt reduction. Ind-Ra expects the credit metrics to remain healthy over the medium term due to a further reduction in debt and low capex requirements.
Commenting on the affirmation, Mr. Dinesh Patidar, Chairman and Managing Director of Shakti Pumps (India) Limited , said, “We are pleased with the affirmation of our ratings in a short span of time. The ‘IND A/Stable’ ratings demonstrate our focus on balance-sheet growth. Going forward we aim to maintain our 30–40% of the market share of the KUSUM scheme while further optimizing operations. We have also witnessed phenomenal growth in our export segment, seen positive reception of our EV products and increased traction for our new products in the B2C segment. Our dependable pillars of strong product portfolio, in-house R& D infrastructure and manufacturing expertise have been the hallmark of our new and innovative solutions for a diverse customer base. The good score indicates that in an environment that is vastly competitive and entrenched with volatile macroeconomic factors, we have demonstrated leadership through our internal efficiencies coupled with responsible and effective growth strategies. The recent government initiatives also augur well for sustained growth in the future.”
About Shakti Pumps
Shakti Pumps (India) limited (SPIL), founded in 1982 as a partnership firm and later converted to a public limited company in 1995, manufactures solar pumps, energy-efficient stainless-steel submersible pumps, pressure booster pumps, pump motors, and other products. SPIL is the only company that manufactures a wide range of products for solar pump installation in-house, including Variable Frequency Drives, Structures, Motors, Inventors, and so on. Pithampur, Madhya Pradesh, is home to two manufacturing facilities with a combined capacity of 500,000 pumps per year (India).
