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This smallcap stock has zoomed 251% against QIP price in less than 4 months

Shakti Pumps (India) hit a new high of Rs 4,240.80 and has surged 27 per cent in past one week

Markets scale fresh peaks

Illustration: Binay Sinha

SI Reporter Mumbai

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Shakti Pumps stock soars: Shares of Shakti Pumps (India) (SPIL) hit a new high of Rs 4,240.80, gaining 5 per cent on the BSE in Wednesday’s intra-day trade, extending its past four days up move on the bourses.

In past one week, the stock of the company engaged in manufacturing of pumps, has surged 27 per cent. It has bounced back 81 per cent from its previous month low of Rs 2,347 touched on June 4.

Currently, SPIL is trading 251 per cent higher over its qualified institutional placement (QIP) price. On March 22, SPIL raised Rs 200 crore by issuing 1.65 million shares to qualified institutional buyers (QIBs) at Rs 1,208.50 per share.
 

The QIP issue garnered major interest from qualified domestic institutional investors, and was fully subscribed by two large Mutual Funds (MFs) - LIC Mutual Fund  and SBI Mutual Fund (827,472 shares each representing 4.13 per cent stake each).

SPIL is currently trading under trade-to-trade (T) segment, where each transaction requires mandatory delivery as a surveillance measure.

Meanwhile, in past one year, the stock price of SPIL has zoomed 616 per cent from level of Rs 592.30 on the BSE. In comparison, the BSE Sensex has rallied 22 per cent.

SPIL is a leading manufacturer of solar stainless-steel submersible pumps, pressure booster pumps, pump-motors, controllers, and inverters among other products.

SIPL has a strong market position in solar pumps under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-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-based government entities.

Moreover, the company has a strong global footprint, and is recognised among India’s leading pump exporters, selling submersible pumps to over 100 countries through more than 550 dealers and retailers.

Keeping in view the immense potential for growth in the Solar Pumps industry, a major portion of the funds raised, through QIP, will be strategically deployed towards increasing the capacity of pumps/motors, inverters/VFDs, and structures.

SPIL said the solar pump industry through the PM KUSUM Scheme, led by the Government, has huge opportunities ahead as it is estimated that there are over 1.4 million solar pumps under Component B (Off Grid Pumps) and 3.5 million solar pumps under Component C (On Grid Pumps) to be installed.

Being industry leader, SPIL has been receiving new orders consistently, which have positively added to its order book of Rs 2,400 crore, as on March 31, 2024, which is to be executed in the next two years.

That apart, SPIL remains optimistic about the continued expansion of its order book, driven by our persistent endeavours to enhance the prominence of solar pumps amidst the farming community.

A shift to subsidised solar pumps, with approximately 60-70 per cent of costs absorbed through state and central schemes, offers a viable solution for government. This initiative promises to balance the subsidies with savings in just 2-3 years while providing reliable power to farmers, steering towards sustainability and contentment, SPIL said.

Meanwhile, during the financial year 2023-24 (FY24), SPIL’s consolidated revenue grew a compound annual growth rate (CAGR) of 20 per cent to Rs 1,370 crore over FY19-FY24 (FY24: up 42 per cent Y-o-Y), supported by strong contribution from the KUSUM scheme as well as healthy export demand.

On the other hand, India Ratings and Research (Ind-Ra) expects the revenue to grow further in FY25 owing to a strong order book of Rs 2,400 crore as at end-FY24.

According to the management, SPIL's continued effort to revise prices in line with raw material (RM) pricing is likely to support the growth in margins. Ind-Ra believes volatile input prices could keep earnings before interest, taxes, depreciation and amortisation (Ebitda) margins at 13 per cent-15 per cent in FY25 due to the increasing exports and revised government tender pricing.

The company’s ability to sustain its Ebitda margins in an increasing input price scenario remains a key rating monitorable, Ind-Ra said in rationale.

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First Published: Jul 03 2024 | 12:35 PM IST

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