Shakti Pumps is one of the leading manufacturers and exporters of submersible pumps for domestic and industrial uses. The company has a strong presence in the solar irrigation segment, as well as a new venture in the electric vehicle market. In this blog, we will analyze the company’s business, fundamentals, technicals, latest news, and future trends.

Company’s Business

The submersible pump manufacturer produces around 5 lakh pumps per year, with a product portfolio of more than 1200 products. It exports its products to over 120 countries, including the USA, Europe, Africa, and Asia.

Shakti Pumps has a 40% market share under the PM Kusum Scheme, which is a government initiative to promote solar irrigation in India. The company provides solar-powered pumps that can operate without grid electricity and reduce diesel consumption.

Shakti Pumps has also entered the electric segment with its subsidiary, Shakti EV Mobility, which manufactures motors, chargers, and other products for electric vehicles. The company aims to leverage its expertise in the pump sector and offer innovative solutions for the emerging EV market.

Shakti Pumps has two major competitors in terms of sales: Elgi Industries and Ingersoll.

Fundamentals

On 25 January 2024, Shakti Pumps announced its results for the December quarter, in which it reported a 301% year-on-year (YoY) increase in its net profit of ₹45 crore. Its revenue also rose by 57.73% year-on-year to ₹495 crore.

However, the company also witnessed a 44% year-on-year rise in its expenses, which could affect its margins and profitability in the long run. The company’s debt-to-equity ratio is also high at 1.6, which indicates that it relies heavily on borrowed funds to finance its operations.

The company’s return on equity (ROE) is 18.7%, which is higher than the industry average of 15.4%. This means that the company is generating more profits from its shareholders’ equity. The company’s earnings per share (EPS) is 14.8, which is also higher than the industry average of 10.9. This means that the company is earning more money for each share of its stock.

The company’s price-to-earnings (PE) ratio is 30.6, which is lower than the industry average of 34.2. This means that the company’s stock is undervalued compared to its earnings potential. The company’s price-to-book (PB) ratio is 4.9, which is higher than the industry average of 3.8. This means that the company’s stock is overvalued compared to its book value.

Technicals

Shakti Pumps’ stock price has been on an upward trend since the beginning of 2024, reaching a 52-week high of ₹453 on 29 January. The stock has gained more than 50% in the past month, outperforming the broader market and its peers.

The stock is trading above its 50-day and 200-day moving averages, which indicates a strong bullish momentum. The stock’s relative strength index (RSI) is 76, which suggests that it is overbought. The stock’s moving average convergence divergence (MACD) is positive and above its signal line.

The stock has a strong support level at ₹400 per share and a strong resistance level at ₹460 per share.

Latest news

  • The company received a contract worth ₹100 crore from the Rajasthan government to supply 10,000 solar pumps under the PM Kusum Scheme. The company expects to complete the project by March 2024.
  • The company launched its new range of electric motors for two-wheelers and three-wheelers, which are compatible with various battery technologies and offer high performance and efficiency. The company plans to expand its product portfolio to include four-wheelers and commercial vehicles in the future.
  • The company announced a dividend of ₹1.5 per share for the financial year 2023-24, which is a 50% increase from the previous year. The company also announced a bonus issue of 1:1, which means that the shareholders will receive one additional share for every share they own.

Future Trends

Shakti Pumps is well-positioned to capitalize on the growing demand for pumps and electrical products in the domestic and international markets. The company has a diversified product portfolio, a strong distribution network, and a huge customer base.

The company faces challenges, such as rising raw material costs, regulatory uncertainties, and intense competition. The company needs to improve its cost efficiency, innovation, and quality to maintain its market leadership and profitability.