Some progress starting to happen under Component C
Maharashtra Cabinet Sanctions ₹100 Billion for Solar Projects (mercomindia.com)
Maharashtra State Elec. board subsidiary Solar Agro Power recently invited bids to procure 49 MW of Solar power under Component C of PM KUSUM program for Feeder level solarization.
Similarly in J&K projects between 1kw to 30 kw to solarize 4000 grid connected pumps.
Another Component C tender from UP this time:
Recently listed Premier Energies has today announced a large 215Cr order for 8000 odd solar pumps under KUSUM Component B received from Uttar Pradesh Dept of Agriculture.
I was under the impression that Premier Energies was into manufacturing and supply of solar modules for solar pumps and not the pumps themselves. Have they ventured into pumps as well? In that case, are they directly competing with Shakti Pumps or could they be buying the pumps from Shakti Pumps?
Edit: From DRHP it indeed appears that they provide EPC services in solar pumps wherein they make the modules and source the pumps from vendors like Shakti.
Lately I have read a lot about solar players and realised that solar pumps is a commodity product… Shakti had first mover advantage but the competition is there… ecozen, alpex, premier, and many more… there is 4-5 components to it. 50% is solar panel and then rest pump, motors etc.
Let’s see how many orders Shakti can fetch but surely has to be vary of competition.
Truth is everything about solar EPC, Cells , Modules or Pumps is a commodity product. Yet all are thriving and may continue to do so for some time due to huge TAM and tailwinds.
I went by the first line in the same paragraph where they say modules are manufactured by us while pumps are sourced from external vendors. I am assuming the later use of manufacturing that you have highlighted, means assembly.
We should clarify in either Shakti Pumps or Premier Energies concall.
Solar pump market is set to expand
If they do anything under 550-575 cr a quarter, that would be a worry as last 3 quarters, their average quarterly revenues have been 558 cr.
So even with 550 cr a quarter, their revenues will be declining.
this is cyclical stock and only seem to works around election year with gov trying to please farmers. I have exited this at 4000 after their big orders hit the news.
Disc : Exited
But the results and stock prices don’t show any short term cyclical pattern, although the execution and order flow would be influenced to some extent due to elections but I guess the major impact we’ll only see when there is a change in the current government.
But, the solar & Renewable theme is a long term theme - Related to energy security (even highlighted in this years budget). So, I guess the theme is good.
The pace, Valuations, companies to invest can change based on metrics and timing etc.
Just my 2 cents.
Disc: Invested.
remember that mejority of the orders only come from gov as subsidises pumps… India’s farmer land holding it too low for farmers to afford a 3 lakh solar pump… as they also get free electricity so organic demand is almost non existent apart from few large farmers…
their RM prices have collapses ie steel and solar modules… that also helped them expand margin…so their margin is unsustainable…
this is clearly a cyclical stock…
any where gov is involved sector becomes cyclical …
Re: Margin
Dinesh Patel (CFO Shakti Pumps) has said that they will maintain a margin of 15-16% even in a worst-case scenario, and will continue to grow their revenue at a rate of 30% year over year
This is from the Q1 FY25 Concall
does the CEO know where steel price will go in next 6 months… or where the solar cell prices be ? If BJP gov collapses post maharastra haryana elections the orders will be canceled. For thouse who dont know the past this company dint even take the gov orders from some states because the prices offered by gov were too low.
So dont believe the CEOs and use your own logic.
This stock is not cheap alredy trading at peak of price to book value range that it got to in last election up cycle. So caution is adviced who are thinking to enter this now.
