Shakti Pumps
Beneficiary of PM Kusum Scheme*1 - Subsidy scheme to install new solar pumps and replace the existing electrical/diesel pumps to reduce the dependency of grid power. In FY 2018-19, a ₹480 bn budget was setup for a 10-year period
Market Share – SPIL claims to have a ~26% Market Share* in PM KUSUM Scheme in volume terms. My estimate indicates that they are now installing approx. 40% of total pumps under this scheme.
Fund raise: SKPI has raised INR200cr (at INR1,209/share) via a qualified institutional placement (QIP) with SBI Mutual Fund and LIC Mutual Fund in March. This boosts the fund’s holding by ~4.1% each. The proceeds will be utilised to fund capacity expansion at its new facility in Pithampur, Madhya Pradesh. This facility will manufacture pumps and motors, inverters, variable frequency drives (VFDs), and structures.
Current Capacity - 5,00,000 units of pumps manufacturing facility located at Pithampur (MP). Solar structure for solar panel 1,00,000 units capacity. Inverters/VFD’s 2,00,000 units
New capacity – “With the recent fund raise, the management aims to set up a new facility which will double the production capacity of pumps/motors to 10lk units, inverters/VFD’s to 4lk units, and structures to 2lk units” Source – Nuvama
Revenue Mix: FY 2023-2024 revenue of 1371 crore. 70% from government projects, 20% from exports, 10% from domestic non-government customers
Revenue Potential–
Annual Revenue potential using 5 lakh pumps: 5 lac units * 3.1 lakh price * 80% OEE = 12,400 crore
Revenue potential using Kusum opportunity capture over 2 years: 50 lac units * 3.1 lakh price * 75% target achievement * 25% market share = 29,000 crore for 2 years
Both the data points indicate significant revenue increase potential over the next couple of years for Shakti Pump if Kusum scheme continues to get traction
Company has an order book of 2,400 crore as at end-FY24
EV upside: Shakti EV Mobility is engaged in the manufacturing and sale of EV motors, charging stations, battery management systems, electric control panels, smart electric control panels, VFDs and other items. SPIL Board has approved investments of Rs. 114.3 crores in Shakti EV Mobility, in one or more tranches over 5 years. Shakti EV has already catered to the two-wheeler and three-wheeler segments and is in the process of testing and developing of other products.
Other considerations:
Promoter is providing conservative estimates and beating it
Promoter forwent his sales commission – sign of a good promoter
I am estimating Arp-Jun 2024 revenue for Shakti pumps to be more than 750 crores
*1 Relevant part of PM Kusum Scheme
Component B:
Individual farmers will be supported to install standalone solar Agriculture pumps of capacity up to 7.5 HP in off-grid areas, where grid supply is not available
Installation of 14 lakh Solar-powered Agricultural Pumps (Offgrid)
Central Financial Assistance of 30% of the cost pump will be provided. The State Government will give at-least a subsidy of 30%; and the remaining at-most 40% will be provided by the farmer. Bank finance can be availed by farmer, so that farmer has to initially pay only 10% of the cost and remaining up to 30% of the cost as loan.
Component C: Individual Pump Solarisation (IPS)
Individual farmers having grid connected agriculture pump will be supported to solarise pumps.
The farmer will be able to use the generated solar power to meet the irrigation needs and the excess solar power will be sold to DISCOMs.
Solarisation of 35 lakh existing Grid-connected Agriculture Pumps (on-grid)
Other opportunity: Replacement of existing diesel pumps • Replacement demand is ~320 lakh pumps with ~220 lakh electric pump and ~100 lakhs diesel pumps
