Order win of 258 crs. To be executed within 90 days so all revenue should be booked in Q4. That means 750 cr revenue should be booked in q4 as management had guided for 500 cr revenue for Q4 in the previous con-call?
The stock hasn’t moved up so it feels like I am missing something.
Would be interesting to know what for
Blockbuster result with 45 cr PAT. Q4 will be even better.
Some notes from the concall (transcript is out):
For a couple of questions, management told that they will tell that separately to the participant which felt weird. Also if you go through the con-call they don’t give very straight answers.They will tell a lot of things in a round-about way. Also keep saying “very good question”.
Most weird is the QIP. They are asking shareholders for raising money of 200cr (not immediately) but anytime in future. This is for pumps and not for EV division.
Here is the question from the concall right on the money:
"Sir many congratulations to you for this excellent performance. Sir you told that your order execution capacity is of Rs. 2,500 crores and if more order book is there then you have enabling resolution for that Rs. 2,500 crores QIP, but sir when you talk about execution means this year your revenue will be of Rs. 1,250 crores, next year let us say the revenues can be about anywhere between Rs. 1,600 crores to Rs. 1,700 crores and even beyond that if you are
taking a run rate of 25% to 30% then also you can go up to Rs. 2,200 crores. What I am asking is that you gave us a guidance of the order book, but actually the execution is annual, sir you still have that much capacity and you don’t have to necessarily expand, can you help me understand this?"Dinesh Patidar: Yes, I understand very well because you have known me for a long time and understand me. We have just taken the permission from the shareholders for QIP, when we feel that we are confident then only we will go for QIP. Though nothing has been finalized yet. Currently we are going for fund raising nothing is finalized. After getting permission from shareholders for
fund raising and after that we will see the visibility and after that we will think about the expansion plan if we are able to bring good orders to our shareholders.
Wouldn’t a loan of 200 cr make more sense instead of diluting equity by 7.5% (current marketcap is 2682 cr)? They can repay that in just a year if they are going to continue making 45cr+ quarterly profit.
Company has approved QIP of 200 cr at 1272. Company is making profit and this fund raising is for pumps division where capacity is already underutilized. Makes no sense to me. Market cap is just 2400cr so this feels like massive equity dilution.
My thoughts on this, last qtr they did 500cr and the management has claimed they have the capacity to do 2500cr rev from the current capacity. So from last qtr’s number they are already at 2000cr run rate which brings them to 80% utilisation. Since the orders have now started kicking in and management must be anticipating larger orders and wants to be prepared to cater to orders beyond the 2500cr mark. But yes the risk is if the orders which they are anticipating for any reason does not come in will again lead to sitting on huge underutilised capacity along with the dilution.
Please read the concall or just the snippet of concall I posted 2 posts above. The current year utilisation will be 50%. Not all the revenue is of pumps.
For current year it’s 50% that’s correct because first 2 qtr was very low. First 3 qtrs sums up to 762 cr. Q4 expected rev is 500 as per guidance which brings to a total of 1262cr for FY 24.
Utilization approx = 1262/2500 = 50.5%.
What I meant was since now they are at 500cr run rate so if you take Q3 in isolation brings them to 80% utilization. 500*4 = 2000.
Utilization as per current run rate 2000/2500 brings them to 80%.
Do you have the breakdown of Pump vs non pump rev. I thought EV trials are very small part so far. And rest is all pumps (I think it’s Kusum & Non Kusum as they mentioned in the call. But I thought they all fall under Pumps only). I might be wrong.
What is the mote, to invest in, peers have better numbers and scalable.
Shakti Pump claims to have capacity of 5,00,000 Pumps per annum. Where as the total Pump order has not yet reached even 1,00,000 Pumps.
QIP was not required at this stage, may be Company would be thinking of taking benefit of currrent valuation. Management claimed during previous concalls that they are passing only enabling resolution for fund raising however they do not have any plan to raise fund in near future. This is not the walk the talk from mangement and is also not appreciable.
Disclosure: Invested from lower levels and booked profits at current level, however still holding some portion.
Folks, just 2 cents from me…
Please understand that many a times there are other decisions also in consideration for management to decide between equity and debt.
Like they may want to onboard some marquee institutional investors who gives credibility and visibility to the company among the various stakeholders. It wouldn’t be nice to have a 2.5 to 3kcrs marketcap and have no insitutional investors onboard. In this case, having two reputed DIIs (LIC and SBI MF) in QIP gives a lot of credibility on corporate governance and future potential.
Regarding doing fund raise, as someone has mentioned, their quarterly run rate will be now 500crs which gives 80% capacity utilisation. In any industry if you see significant demand coming in the future then you need to start building capacity well in advance. It will be foolish for company to let go some orders just because capacity is under construction!!!
Thanks
Very solid q4 numbers. Way above management guidance of 500crs revenues. Significant margin expansion because of low solar module prices!!!
Q4 numbers have led to huge surge in the stock. Is the long term moat getting stronger or was it a one time thing due to lower input prices?
If they are able to get the run rate to 500cr/qtr it still seems worthwhile investment
The debtor days are still very high at 178
There is not much scope to reduce the debtor days as its major revenues (67%) come from government.
) .Disc ; Invested after q3 results very small quantity. Will add more if price is within range. ( Doubt it 
)
I have a tracking position, hope am able to scale up 
Good numbers. The only problem I see is the lumpiness in their cash collection which can be noticed in uneven and erratic inventory turnover and cash conversion cycles. Reason for that is not surprising given that they work with government entities and their small scale of operations puts them vulnerable to delay in payments, thus impacting financials. Unlike Tatas or Adanis they won’t have leverage or influence on procurement departments of government entities.
Although they claim to have an order book of 2000+ crores, the revenue streams will always be unpredictable as they have been in the past. But short term narrative and earnings look good and one can expect further rally in the stock.
Please go through below video to understand what has changed in the industry dynamics (government scheme) and how the revenues/proftiablity will move up linearly from here!!!
