Stocks

Shakti Pumps generates over 600% return since April last year

Thomas Abraham Bengaluru | Updated on June 14, 2021

The company benefits the most from PM-Kusum scheme

Shakti Pumps, a major player in solar pumps and motors, gave multi-bagger returns to investors who had the patience to hold the stock. The stock has been on a dream run, galloping from around ₹112 apiece on April 1, 2020, to nearly ₹519 on March 31, 2021 — a gain of over 363 per cent.

After registering its all-time high at ₹910, on June 8, the stock has retreated a bit. Currently, it is hovering around ₹801, still recording a whooping return of 615 per cent, from the price recorded on April 1, 2020.

Speaking to BusinessLine, Dinesh Patidar, Chairman and Managing Director, Shakti Pumps India Limited, said the company is expecting its topline to touch ₹2,500 crore in the current year, up from ₹936 crore in financial year ending March 31, 2021—thanks to the Centre’s KUSUM scheme and a big boost in exports. Exports are expected to touch ₹500 crore, up from ₹180 crore in FY21. The firm exports to Africa, Middle East and the US.

Shakti Pumps started operations in 1982 in Madhya Pradesh and is now one of the leading manufacturers and exporters of stainless-steel water pumps, motors, and solar pumps.

PM-KUSUM scheme

One of the aims of the Centre’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme is to help raise the income of farmers. Thanks to solar power to operate the pumps, the farmer would no longer wait for power from the discoms to irrigate his land. That would naturally, increase his output, and result in higher incomes for him.

“Kusum is a good scheme for all the stakeholders,” said Patidar.

The government is looking to install four lakh pumps in the country under the KUSUM scheme. Last year, about 35,000 pumps were reported to have been installed. That leaves a huge scope, going forward, for Shakti Pumps.

Also read: PM-KUSUM: Focus shifts from pump to agri feeder

Besides Government schemes, Shakti Pumps also supplies to OEMs, export markets, industrial and others in the country.

The pumps market in India is estimated to reach $3.8 billion by 2022. The factors driving the demand for pumps in India include infrastructure development, growth in agriculture, and the Government’s plan to provide piped water to all households by the year 2024.

Patidar pointed out that the input cost of the solar pump increased during the year, but the company focussed on process control, capacity and overheads to keep the final price nearly unchanged.

“R&D is our strength,” he said.

Institutions

Promoters of Shakti Pumps held 54.66 per cent of the equity as at March quarter ending. And they will raise this stake when the opportunity arises.

Patidar also pointed out that no stocks of the promoters have been pledged with any institution.

However, no domestic mutual funds or financial institutions hold any shares of Shakti Pumps. But will that change on the strength of its latest financial numbers, share price movements and expected jump in turnover and profits?

Published on June 14, 2021

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