The shares of this smallcap company locked a 5 percent upper circuit after the board is considering a proposal to issue bonus shares in the ratio of 5:1. In just six months the stock has delivered more than 200 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 8,606 crores, the shares of Shakti Pumps (India) Ltd started Monday’s trading session on a lower note at Rs. 3,999 compared to its previous close of Rs. 4,067.37. During the trading session, the shares locked a 5 percent upper-circuit at Rs. 4,270.65 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced that the meeting of the Board of Directors is scheduled to be held on October 07, 2024, to consider a proposal to issue bonus shares in the ratio of 5:1.
This would entail distributing 5 new fully paid-up equity shares of Rs. 10 each for every 1 existing fully paid-up equity share of Rs. 10, subject to shareholder approval.
This proposed bonus issue follows a long gap since Shakti Pumps last issued bonus shares in 2011 when it provided a 1:1 bonus. The company has not made any bonus announcements since then, making this proposal significant for current investors.
Financials:
Looking at the company’s financial performance, the revenue decreased by around 7 percent from Rs. 609.28 crores during the March quarter to Rs. 567.56 crores in the June quarter. Contrastingly, the net profits jumped by 3 percent from Rs. 89.64 crores to Rs. 92.66 crores during the same timeframe.
Order Book:
As of June 30, 2024, the company had an order book of Rs. 2,000 crores. Out of which majority of the orders were received from the Maharashtra State Electricity Distribution Company Limited (MSEDCL) and Maharashtra Energy Department Agency (MEDA).
The remaining orders were received from the Haryana Renewable Energy Department (HAREDA), Department of Agriculture, Uttar Pradesh, Rajasthan Horticulture Development Society (RHDS), Ajmer Vidyut Vitran Nigam Limited and others.
PM KUSUM scheme:
The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme, launched on March 8, 2019, aims to enhance energy security for farmers in India while promoting renewable energy. Under the KUSUM scheme, the government has a target to install over 3 million solar pumps.
The PM-KUSUM scheme has proven to be highly beneficial for Shakti Pumps (India) Ltd, enhancing its business prospects and supporting its role in the renewable energy sector. Additionally, the company is the biggest beneficiary under the PM KUSUM scheme and holds a 25 percent market share in the scheme.
Future Outlook:
The company has been focusing on research and development (R&D) initiatives, with 29 patents filed and 14 patents received, which are expected to enhance the company’s technological capabilities in the future.
Furthermore, the company plans to invest Rs. 250 crores over the next five years in its newly incorporated green subsidiary.
Company Profile:
Headquartered in Pithampur, Shakti Pumps was incorporated in 1995. The company is primarily engaged in the manufacturing of pumps and motors of various kinds.
It also offers advanced water pumping solutions to a wide range of applications such as irrigation, horticulture, domestic water supply, and commercial and industrial applications.
Written By Vaibhav Patil
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