The core sectors of the economy, such as agriculture, infrastructure, and building services, constantly require pumps, which facilitates the growing importance of the pump sector in the country. As the landscape of water pumping evolved, this company made strategic moves that set it apart. In this article, we embark on a fundamental analysis of Shakti Pumps, a company that has turned out to be a 9x multi-bagger from a low of COVID-19. Join us as we delve into Shakti Pumps and look into its financials. 

Fundamental Analysis Of Shakti Pumps

Company Overview

Shakti Pumps Logo Image

Incorporated in 1982 and led by Mr. Dinesh Patidar, Shakti Pumps (India) Limited (SPIL) launched its business as a core pumping solutions company, elevated itself to becoming the first manufacturing unit for stainless steel pumps and energy-efficient motors, and has now made a strong presence in the pump industry.

Shakti Pumps is the only company with in-house manufacturing of a whole range of products, including variable-frequency drives, structures, motors, inventors, etc. for solar pump installation. It has been certified by the Bureau of Energy Efficiency (BEE) with five-star ratings. 

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The manufacturing facility located at Pithampur (MP) has a production capacity of 5,00,000 units of pumps and is well supported by advanced in-house R&D and robust backend support. It has a wide range of products with varied applications in agriculture, building services, power, oil and gas, metals and mining, and others, offering more than 1,200 product variants. It has a network of 500+ dealers in India, a 400+ service center, and 18 state-based marketing branches.

Shakti Pumps is dominant, with ~30%+ market share in the domestic solar pump market under the PM KUSUM scheme. It has a diversified customer mix from government, solar OEM players, industries, etc., resulting in a low customer concentration mix. It exports to 100+ countries.

Shakti is also part of the International Solar Alliance (ISA), which consists of an aggregated demand for more than 2,70,000 solar pumps across 22 countries, more than 1 GW of solar rooftops across 11 countries, and more than 10 GW of solar mini-grids across 9 countries under its respective programs.

Segment Analysis

SPIL is mainly engaged in the business of manufacturing various types of pumps and motors. Considering the nature of the business of SPIL, the company has four segments:

  • Solar EPC: Solar EPC stands for “Solar Engineering, Procurement, and Construction.” It refers to a comprehensive approach to the creation of solar energy projects that span the whole project life cycle, from initial design and engineering to component procurement and solar facility building.
  • Solar OEM: “Solar OEM” stands for “Solar Original Equipment Manufacturer.” In brief, it refers to companies that design, construct, and provide original solar energy-related equipment and components such as solar panels, inverters, mounting frames, and other vital components used in solar power system.
  • Based on the geographical segment, the revenue from the operation can be divided into revenue from India and overseas. The revenue from operations in India contributes 88% and 12% from overseas operations in FY23.

Industry Overview

The global solar industry was valued at USD 50 billion in 2019 and is estimated to grow by 26% to reach USD 200 billion, while the global pump market was valued at USD 96 billion in 2022 and is estimated to be at USD 119.39 billion by 2028, growing at a CAGR of 6.3% by 2026.

With a forecasted growth rate of CAGR 5.4% between 2023 and 2028, the Indian pump industry is a direct function of the progress of various sectors in the economy. The constant requirement of pumps by the core sectors of the economy has underlined the growing importance of the pump sector in the country. The agriculture sector is the largest consumer of pumps, and the building services industry comes next. The rest of the infrastructure sector—the highly technologically intensive sectors like oil and gas, water and waste management treatments, metals, and mining—also has a high demand for pumps.

The industry is gradually picking up pace, notwithstanding the global economic scenario, and there is a requirement for exploring high-value, energy-efficient pumps. With India’s tiny share in the exports of pumps in the world market, there are a host of opportunities available to Indian players.

Fundamental Analysis Of Shakti Pumps: Financials

Revenue & Net Profit

Shakti Pumps reported Rs 968 crore in revenue in FY23, an 18% decrease compared to Rs. 1178 crore in FY22. The net profit earned in FY23 decreased by 63% compared to FY22, from Rs 65 crore to Rs 24 crore. The decrease in revenue and profit was primarily driven by adverse business conditions like an increase in raw material costs and holding some orders of PM KUSUM – II due to lower margins, impacting both the top and bottom lines.

Considering a five-year time horizon, revenues have grown at a CAGR of 15.39%, and net profits have fallen at a CAGR of 14.56%. A closer look at the data reveals that the company’s revenue and profits fell in FY20 due to a delay in the KUSUM scheme, which led to state governments not floating their tenders. 

The table below exhibits the revenue and profits of Shakti Pumps over the last 5 years. 

Fiscal YearRevenue from operations (In Crores)Net Profit (In Crores)
4-year CAGR15.39%-14.54%

Profit Margins

The financials reported an operating margin of 7% and a net profit margin of 2.5% in FY23, compared to 9.9% and 5.5%, respectively, in FY22. From a five-year perspective, operating margins stand at 10.96% and net profit margins at 4.12%.

The margins have been unstable in the past years due to delays in the KUSUM scheme and fluctuations in raw material prices. In FY23, due to a sharp increase in raw material prices, the company abstained from taking or executing newer orders and only executed pending orders, resulting in lower revenues and thus lower profitability.

The table below exhibits the profit margins of Shakti Pumps over the last 5 years.

Fiscal YearOperating Profit Margin (%)Net Profit Margin (%)
5-year average10.964.12

Return Ratios

As for its return ratio, Shakti Pump’s business generates a low return on capital employed and equity. Its RoCE and RoE stood at 9.84% and 5.77%, respectively, in FY23.

The RoCE and RoE ratios have been unstable due to unstable profitability ratios. On a 5-year average basis, the ratios stand at 15.1% and 10.93%, respectively.

The table below shows the ROE and RoCE of Shakti Pumps for the last 5 years:

Fiscal YearReturn on Capital Employed (%)Return on Equity (%)
5-year average15.110.93

Leverage Ratios

Looking at the company’s leverage status, we can see that it maintained comparatively low debt and it consistently decreased. Over the last 5 years, the highest recorded debt-to-equity ratio was 0.73 in FY20.

This indicates that the company is less financially burdened because it relies less on borrowed capital to fund its operations and expansion. This also means that the company can retain more of its revenue because it has a small commitment to repay debt and interest.

In terms of interest, the company’s interest coverage ratio decreased in FY23, which was reported at 3.06 due to the accounting impact of Ind AS 116. This means the company has generated enough gross profits to cover its interest expenses three times over. The ratio has been strong except for FY20 due to losses.

The table below shows the D/E and interest coverage ratio of Shakti Pumps for the last 5 years:

Fiscal YearDebt / Equity (Times)Interest Coverage Ratio (Times)
5-year average0.424.3

Key Metrics

CMP1097Market Cap(Cr)2017
EPS11.1Stock P/E99
Promoter Holdings56.14%FII Holdings0.35%
Debt to Equity0.18P/B4.76
Operating Profit Margin7.00%Net Profit Margin2.50%

Fundamental Analysis Of Shakti Pumps: Future Plans

  • The company has a plan to continuously provide innovative solutions through its advanced R&D support.
  • Implementation of the Uganda project has started which aligns with the green energy plans in Africa. 
  • The initial plan to replace 20 lakh pumps of the total 100 lakh diesel pumps ~15% of which has been achieved and continues.
  • To maintain its dominance in both national and international markets and augment the export segment.
  • The company is also expecting to receive new orders under PM-KUSUSM scheme III.


In the article “Fundamental Analysis Of Shakti Pumps” we have looked at their business, the industry it operates, five-year financials, and its future plans. The company has great opportunity with the government focusing more on energy but the margins are too reduced and it seems more dependent on government schemes.

Further analysis is recommended before investing to understand the risk and return characteristics of this company. What do you think about Shakti Pumps as an investment opportunity? Do let us know in the comments section below.

Written by Ashish Agarwal

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